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Other terms you may encounter when thinking about of a bridge loan include swing loan and interim financing; these are the other terms used for bridge loan. This type of financing is helpful for people who are looking into buying a real estate property immediately because bridge loan allows them to have immediate cash when the need arises. But there is a setback in acquiring a bridge loan because this convenience comes at a price. You will have to deal with above normal interest rates and your bridge loan would have to be backed by collateral usually in the form of real estate. But nevertheless, a lot of potential home buyers avail of the bridge loan because it gives them the option to have money until they have a better alternative.

Bridge loans are actually very beneficial to suiting an individual home buyers needs. For example, bridge loans are widely practiced in the real estate market because there is usually a gap between the time it takes to sell one property to the purchase of the next property so bridge loan would give a home buyer greater convenience and options. Generally, bridge loans are availed of in a two to three weeks period for the purpose of financing real estate purchases. These real estate projects include avoiding foreclosure, retrieve a real estate property, and even to quickly acquire a particular property. In addition, the bridge loan can be used to avail of long term financing arrangements.

Bridge loans are sometimes mistaken for hard money loans because both have similarities to each other. You should be aware though, that these two have dissimilar characteristics. The main dissimilarity is that hard money loan can be associated with a trouble property and even a problem in your situation. But this is not the case in bridge loan because a bridge loan basically refers to an interim financing method until such a time that an individual can obtain permanent financing. Bridge loans usually also charge a higher rate of interest when compared to the hard money loan. However, the main advantage of a bridge loan is that it can lend a higher amount of money even during the starting phase of acquiring real estate property. Bridge loan is also commonly used for down payment because it gives you the equity to buy a new house while waiting for your old house to be sold.

Karen Rhodes is a lifelong resident of the Chattanooga area and is a successful REALTOR. Visit http://www.ChattanoogaRealEstateToday.com for more information on Chattanooga and its surrounding areas.