10 biggest myths about bridge loans (and what the market misunderstands)

"Loans for short-term residential financing, now known as bridge loans, have existed since the mid-20th century, yet many real estate agents and loan officers still treat them as an edgy, last-resort strategy. In reality, however, bridge loans are powerful tools for a variety of situations, and understanding how they work can help agents serve clients more efficiently and win more business."

"Because it carries a higher interest rate and a shorter term than most residential mortgages, you may be worried that bridge loans present an outsized risk for your clients. In reality, greater risk lies in trying to time two transactions perfectly in a market environment where delays can derail both deals. In many states, like California, bridge loans are cross-collateralized, short-term and fully backed by home equity, actually reducing risk."

Bridge loans are short-term residential financing tools available since the mid-20th century that many agents still view as last-resort measures. They can serve as powerful, flexible solutions for seller-buyers, agents seeking a differentiator, and clients needing fast closings. Bridge loans typically carry higher interest rates and shorter terms than traditional mortgages but are often cross-collateralized and fully backed by home equity, which can reduce overall risk. Qualifying is straightforward, usually requiring sufficient home equity and a credit check without pay stubs, tax returns, or W-2s. There is no prepayment penalty and interest accrues only for days the loan is held.

Read at www.housingwire.com