Hard Money Bridge Loans & Financing: What You Need to Know

Bridge loans are essential tools for real estate investors and property owners who need quick, short-term financing. In partnership with ACOM Capital, we want to break down the key aspects of these loans, how they work, and why they might be a great option for your real estate investment needs.

What is a Bridge Loan?

A bridge loan provides short-term financing to “bridge” the gap between the purchase of a new property and the sale of an existing one. This type of loan allows property owners to leverage their existing equity to finance a new purchase. These loans typically have terms of less than 12 months and are designed for quick funding, making them ideal for fast-moving real estate transactions.

Here’s how it works:

• A borrower uses the equity in their existing property as collateral to secure financing for a new property.
• Once the new property is acquired, the borrower sells the previous property and uses the sale proceeds to pay off the bridge loan.

Alternatively, the process can work in reverse, with the bridge loan being secured against the new property while the existing property is being sold.

Why Choose a Bridge Loan?

Bridge loans provide significant flexibility, allowing borrowers to act swiftly when opportunities arise in the market. Some common reasons to choose a bridge loan include:

• Speed: Hard money bridge lenders, like ACOM Capital, can provide funding in days, unlike traditional lenders that may take weeks or even months.
• Flexibility: Bridge loans can be used on various property types, including single-family homes, multifamily units, commercial buildings, and industrial properties.
• Less stringent requirements: Hard money lenders focus more on the value of the property rather than the borrower’s credit score, making these loans more accessible to borrowers with less-than-perfect credit.

Home Bridge Loans: Securing a New Home Before Selling the Old One

One of the most common uses for bridge loans is purchasing a new home before selling the existing one. Homeowners can use a bridge loan to pull equity from their current property for a down payment or to cover the entire purchase price of the new home. This eliminates the need to move twice and provides flexibility in the homebuying process.

Borrowers can also utilize two separate bridge loans — one against the existing home and another for the new property — if needed.

Commercial and Multifamily Bridge Loans

For investors and developers, bridge loans offer an excellent solution for short-term financing. Whether you’re purchasing a new commercial building or acquiring a multifamily property that requires renovations, bridge loans allow you to secure the property quickly, make improvements, and refinance with long-term financing once the property is stabilized.

ACOM Capital specializes in financing for:

• Commercial properties: From office spaces to retail centers, commercial bridge loans help business owners and investors leverage their real estate for new opportunities.
• Multifamily properties: Duplexes, triplexes, and larger apartment buildings can all benefit from bridge financing, especially when quick acquisitions are necessary.

Pros & Cons of Bridge Loans

Pros:

• Quick access to capital: Bridge loans can close in days, making them ideal for time-sensitive real estate deals.
• Flexibility: Use bridge loans on various property types or to avoid moving multiple times when transitioning between homes.
• Less strict qualification criteria: Bridge lenders focus on the value of the property rather than the borrower’s creditworthiness.

Cons:

• Higher interest rates: Bridge loans often have higher rates compared to traditional loans, reflecting the short-term nature and risk.
• Transaction fees: Origination fees and other transaction costs can be higher compared to conventional loans.

A Bridge Loan for Every Situation

Whether you’re looking to purchase your next home before selling your current one, refinance a multifamily property, or secure funding for a commercial project, bridge loans offer unparalleled speed and flexibility. ACOM Capital can help you navigate the world of hard money bridge loans, offering fast, reliable financing when you need it most.

Reach out to ACOM Capital to discuss your real estate financing needs today!

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