Definition
A bridge loan is a short-term loan used to bridge the gap between buying a new house and selling your old one. These are typically short-term loans.
Understanding Bridge Loans
Bridge loans appear when buying a new home before selling the old one. They offer short-term funding to cover gaps. In simple terms, it's a temporary loan that helps transition between properties. Example: If your current home is worth $300,000 and you buy a new one for $400,000, a bridge loan might cover the down payment until you sell. It’s not a long-term solution or a replacement for a traditional mortgage. Instead, it fills a short-term need, often with higher interest rates. It's also not a guaranteed approval and depends on your financial situation and lender criteria.
