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What is the Process of a Hard Money or Bridge Loan?

Bridge loans alias hard money loans have become very popular in different parts of the world. There are some real estate markets that dwell on bridge loans. Whenever investors or homeowners want to buy a new property before selling their current house, they use two different routes to finance the down payment. They make use of a home equity loan or a bridge loan. These are two different worlds with a unique set of benefits and drawbacks. If you are absolutely sure that your home can be sold, you should not worry about taking a hard money loan. A trustworthy lender will make sure you bag a great deal without any risks or hassles.

They are Cheap!

When compared against bridge loans, home equity loans are cheap. However, bridge loans prove to be reliable and easy to gain. Additionally, many conventional lenders don’t offer money on properties that are on the market. This is when hard money loans become useful.

So, what are hard money or bridge loans? By definition, these are temporary loans that cover the gap between a new mortgage and the sales value of a new property. It is useful if the buyer’s current home is not sold. Funds from a bridge loan can be used as a healthy source of down payment for your new property.

Policies and Guidelines!

Many hard money loan lenders don’t work with fixed policies or guidelines. In fact, they don’t bother about the borrower’s debt-to-income ratio or FICO minimums. The thing about hard money loans is that you should have a promising property. A lot of borrowers prefer bridge loans due to the following reasons:

1) The buyers are allowed to own two properties simultaneously. Voila, doesn’t this sound like a great deal?
2) Buyers find it hard to bag another loan because of their current financial status.


The fees for bridge alias hard money loans differ from one lender to another. The interest rates fluctuate significantly between lenders. Some loans carry no payments for around five months. During this time, the interest will accumulate and the has to be repaid when you sell the property. The charges can be broken into several categories. This includes notary fee, administration fee, drawing fee, escrow fee, appraisal fee, title policy fee and recording fee. Regardless of these charges, there are several benefits in buying a bridge loan!

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