Does every hard money lender do bridge loans? Where do you find a hard money bridge loan lender?
A lot of people use the term bridge loan interchangeably with gap funding or hard money, but a true bridge loan is slightly different. They’re shorter-term than a hard money loan, and they’re typically less expensive because of that.
Is a Bridge Loan Different from a Hard Money Loan?
A hard money loan is longer and broader than a bridge loan.
- The average bridge loan lasts 30 to 45 days. Hard money loans can last up to a year or longer.
- Bridge loans get you from one property to the next. Hard money focuses more on a single project.
- Bridge loans get paid when your old property sells. Hard money loans get paid when you refinance or sell the property the loan was originally for.
- A bridge loan is used as temporary funds to close on a house. A hard money loan can be used as a more general budget for a purchase. Many come with the option for escrows to fix up the property over time.
Typically bridge loans are used for 3 situations in real estate investing. When you:
- Are buying a new property and already have one listed for sale
- Need to cover down payment on a new property
- Find a great deal but your bank’s financing won’t be ready in time.
What Lender Give Bridge Loans?
To find these quick, short loans, a small local lender (like Hard Money Mike) will be your best and fastest option. Smaller hard money lenders prefer working with deals that provide good, safe returns. Bridge loans do exactly that.
A bigger hard money lender will do a bridge loan, too. But they may take up to four weeks to close, which often defeats the purpose of true bridge lending.
You can also get bridge loans from some banks. Not big, national banks, but many local banks and credit unions who work with real estate investors may do bridge loans, too. Banks usually offer the cheapest bridge loans, but can take 3 – 4 weeks or longer.
Ask around to hard money bridge loan lenders you know to learn their pricing and see if it’s worth it. You can use our free loan optimizer to find out if you can get a good deal on bridge loans near you.
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