Bridge Loans Can Be Helpful
for Families Who Are:
Transitioning a Loved One Into a Care Community
When moving into a care community there are expenses like entry fees, monthly fees, and moving fees that need to be paid. Bridge Loans can cover these costs while you are waiting for your house to sell or other funding sources to come through.
Waiting for Veterans Benefits to Kick In
When applying for Veteran Benefits, the application process is lengthy and approval takes time before funds become available. Families can use a bridge loan to cover expenses that occur between the initial application and final approval and payment.
Selling a Home
When selling a house through a traditional route, most Realtors are going to ask you to prepare the house for sale, taking time, even if you are cleaning it out and selling it as is. Then you have time to market with people walking through the house, which may not be convenient. Then you have to get through inspections, appraisals, and loan approvals, where the deal can fall apart.
As an Alternative to a Reverse Mortgage
A reverse mortgage is only an option when at least one homeowner continues to live in the home. It might make sense for homeowners who plan to use the proceeds for at least 5 years. A bridge loan is a good alternative when you only need the funds for a short period of time.
Risks of Using Bridge Loans
What if the House Does Not Sell
Some seniors turn to a bridge loan, with the plan to pay it off when they sell their family home. But what if the home does not sell? The senior might end up with the mortgage on their existing home if it is not yet paid for as well as the bridge loan fees. Or if you can't pay back the loan it may cause the home to be foreclosed.
Other Negatives of Using the Bridge Loan
- Interest Rates are High
- Origination Fees are Expensive
- Cost more than a Home Equity Line of Credit
- Must qualify to own the existing home and bridge loan
Obtaining A Bridge Loan
- Funds are wired directly to your senior living community in as little as 24 hours.
- The loan is not contingent on collateral, like a home or a car, so the approval process does not take very long.
- Most lenders allow up to 6 people on the application, so it is a good option for families to help their senior.
You may find that the communities you contact have resources for bridge loans. If you would like a recommendation for a bridge loan, please give us an email and we will share our resources.