Essential Tips When Considering a Real Estate Bridge Loan
November 19, 2015
Most individuals are wary of loan companies that offer quick money with sky-high interest charges. Bridge loans fall into this category. If you’re considering this option, then you should make sure you know all you can concerning them. Within this article, you will find information designed for protecting you when bridge loans become an necessity.
Understand what APR means before agreeing to a bridge loan. APR, or annual percentage rate, is the amount of interest that the company charges on the loan while you are paying it back. Even though bridge loans are quick and convenient, compare their APRs with the APR charged by a bank or your credit card company. Most likely, the real estate bridge loan’s APR will be much higher. Ask what the bridge loan’s interest rate is first, before you make a decision to borrow any money.
Never be dishonest on a loan application! You may think you’ll get a better loan if you embellish the truth, but you may end up with jail time instead.
Be aware of the deceiving rates you are presented. It may seem bridge business loans can be affordable and acceptable to be charged fifteen dollars for each one-hundred you borrow, but it will quickly add up. The rates will translate to be about 390 percent of the amount borrowed. Know exactly how much you will be required to pay in fees and interest up front.
Remember that a bridge loan will not solve all your problems. It is important that you keep up with all of the payments and fulfill your end of the deal. When real estate bridge loans are not paid on time, customers can face high fees that can quickly get out of control.
Before getting a bridge loan, it is important that you learn of the different types of available so you know, which are the best for you. Certain bridge loans have different policies or requirements than others, so look on the Internet to figure out which one is right for you.
Be certain you have enough funds on hand when your bridge loan comes due. Lenders will try to withdraw funds, even if you fail to make a payment. You will get hit with fees from your bank and the loans will charge more fees. Budget your finances so that you have money to pay back the loan.
Make sure you have researched the lender prior to signing anything. You might think you have no where else to turn, but it is vital you know all the information first. Make sure the company is trustworthy and use historical data to estimate the amount you’ll pay over time.
Paying off a bridge loan as quickly as possible is always the best way to go. Paying it off immediately is always the best thing to do. Financing your loan through several extensions and paycheck cycles gives the interest rate time to bloat your loan. This can quickly cost you several times the amount you borrowed.
Although some scenarios may require a real estate bridge loan, it’s crucial that you understand all about them. The tips in this piece will prove critical if you need to go this route.