Bridge Loans are short-term and temporary loans used to reposition an asset at higher than prevailing interest rates. The bridge loan is backed by real estate collateral. There is an interest only payment, usually good for 1-2 years with no prepayment penalty. This type of financing allows borrowers to meet current obligations by providing immediate cash flow. Borrowers must illustrate a clear exist strategy to the lender to pay back the bridge; this can be accomplished through a refinance, or the sale of the subject property for a profit after a rehab.
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