Pros and Cons of a Colorado Bridge Loan

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Pros and Cons of a Colorado Bridge Loan

Conventional lenders take ages to guarantee financing. Sometimes, a long time is too much time. A Colorado Bridge Loan is acquisition power. Get it—and get it fast!

A Colorado Bridge Loan is a short-term loan. For the most part, it helps individuals secure a new home before their old home sells. For example, in a favorable housing market, the Smiths need to sell their home and move to a new area. They search for new homes. It just so happens, they find the perfect house in the perfect neighborhood. Near work. Next to the kids’ school. Great, right? Maybe. It’s a coveted area –they think. Many other people may be vying over the property. How can they secure it?

Well, the answer is a Colorado Bridge Loan. A Colorado Bridge Loan is acquisition power. Get it, and get it fast! Conventional lenders take a long time to guarantee financing. Sometimes a long time is too much time. The Smiths want that home. They have a good credit score, a considerable amount of home equity, and a seller’s market. They do not have to wait months for the banks to come around—The Force of metaphysical lending is on their side. They talk to a hard money broker or Colorado Private Money Lender. As stipulated, the Smiths use their current home’s equity or cash down as collateral to secure the newer home. Within a week, they have the money and the purchasing power.

The (hypothetical) Smiths understand that a Colorado Bridge Loan is temporary, lasting generally anywhere from 3 to 12 months. A Colorado Bridge Loan is not a means of long-term financing, but rather a means of providing needed and short-term cash flow to complete a financial objective or acquire an asset until conventional lending is made available, most often at a lower rate. Thus, the loan loan “bridges” between short-term and long-term financing, and respectively high-interest to low-interest rates.

Risks of a Colorado Bridge Loan

As stated above, one of the main benefits of a Colorado Bridge Loan is that it’s a quick arsenal of purchasing power. Good deals and hot commodities are coveted. Money is required to lock down assets. Hard money Colorado Bridge Loans are a means to such an end. Along with this, a Colorado Bridge Loan offers comfort—buy a new home, move in to it, and comfortably wait for the old home to sell. This is more appealing than sell, rush out, find temporary housing till the new home’s financing closes. On top of this, homes empty of the clutter of the previous occupant may look better lending possibly to a quicker sale.

A Colorado Bridge Loan is an arsenal of purchasing power.

With the pros in mind, let’s move to the cons. First, time is an issue. If individuals reach the end of your Colorado Bridge Loans finance period without selling the older home, they will need to refinance the Colorado Bridge Loan. Unforeseeable difficulties such as market downturns and local variables can hamper the selling process of homes in a given area and thus use up the limited time of the bridge financing. Second, home value is a market variable, and equity is tied to such a variable. Should you have any questions or concerns, talk to your hard money broker at Level 4 Funding to asses benefit and risk in order to see if a Colorado Bridge Loan is right for you.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLCDennis Dahlberg
Level 4 Funding LLC
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Dennis Dahlberg Broker/RI/CEO

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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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