The Basics of Bridge Loans

Do you have any idea what bridge loans are? How about this: what comes to mind when you hear the word bridge? Probably something that connects to locations right? That’s the same concept basically. Investopedia defines bridge loans as a type of short-term loan that you can use in order to remove an existing debt or help you get by until you are able to obtain better financing. Thus business books often associate the term with “interim financing.”

Let’s look at an example so that we can understand the concept better. Generally loans are financed by banks or insurance companies. These types of loans often have terms that can last for as short as 5 years to something as long as 30 years. Bridge loans meanwhile are often funded by hard money lenders or even private money lenders. Compared to a traditional loan, these loans have high interest rates but are compensated for the short time they can be acquired.

hard money loan

approved loan

Going back to our example, say a company has managed to equity financing from a bank. However said financing is expected to close in a year. Unless the company is able to get money within this time period, then it will be in trouble. This is where bridge loans come in. By getting one, the company will have the necessary working capital it needs until the financing pushes through.

So what other reasons require you to apply for such? This time instead of a company, let us look at an individual as an example. Say that person has a property that is currently facing issues with regards to upkeep. The mortgage is due in three months and if not paid, the property enters into foreclosure. By a stroke of luck, the owner manages to sell the property. However the only buyer will only agree to a payment in five months? To address this problem, the owner can enter into such a loan to ensure that the property is not foreclosed and the sale pushes through.

There are many private money lenders that offer such a loan. In Denver, one such company is Montegra Capital Resources Ltd. (www.montegra.com). They offer short term loans with interest between 9% and 11%. If you think that the interest seems a bit high, they have flexible terms that can suit your needs. Further the bridge loans that they offer are usually paid “interest only” which means that they can actually help in minimizing your monthly dues.

With these types of terms, it is no wonder that they have gained popularity especially in the real estate industry. Another reason to their popularity is that unlike banks, private money lenders rarely set minimums or other ratios that the borrower needs to comply with. In addition these loans close quickly unlike those that you apply for in banks. For Montegra Capital, the loans usually close around 4 weeks from the time of the application. Indeed bridge loans have become a great help especially when it comes to protecting and improving real estate.

Different Types of Hard Money Loans

It has been common nowadays that borrower seek hard money loans for investing in real estate like having a commercial or residential property. Hard money lenders – mostly private money lenders or small companies sometimes lend money to individuals looking to invest in real estate. Montegra has been a leading hard money lender and they offer a competitive hard money loan rates in Colorado.  Montegra has been adaptable to fit the needs of an unpredictable real estate industry.

hard money loan

private money lenders

Apartment Renovation Loan

Montegra offers property investors to be able to purchase residential homes and pay for any renovation needed for the apartment renovation loan program.  They work with the borrower to sufficiently fund them to cover the costs of purchasing a unit and renovating the property until it is fully rented that produces income to qualify for a long term loan from a conventional lender.

Smart Buyer Loan Program

If the assessed value of the property is higher than the original contract price, Montegra offers a Smart Buyer Loan Program wherein they can used the appraised valued to settle the amount of the loan, which will be possible to refinance up to 80% of the original purchase price if the appraisal is high enough.

Acquisition Loans

Montegra offers hard money acquisition loans with a different standard than the traditional lender or banks.  They approve request about the acquisition of good properties with the adequate loan to value rates.  Montegra swiftly respond to the request of the borrowers within 24 hours.  This kind of loan is offered for borrowers that find it difficult to find a private money lender that is able and willing to lend them the money to buy an investment property.

Loans to Foreign Nationals

Foreign nationals find it difficult to acquire loans to buy residential or commercial real estate in America.  Montegra has shaped a simple program that provides aid to foreign national that may want to borrow money to purchase real estate property in Colorado when other private money lenders or banks are unwilling to lend them.

Aspen Hard Money Loans

Aspen has been a great vacation spot for some families in the U.S.  There are so many properties that individuals are eager to buy either for residential or commercial use.  Montegra has been funding hard money loans in Aspen for the past 43 years now.  They offer Cash out Loan in Aspen wherein they funded a loan for a family investment group to build a property in Starwood.

Another example is that they offer bridge loan on a commercial property in Basalt that a specific borrower wanted to redevelop a property and construct a condominium in there.

Value Added Loans

When a borrower has plans to buy a property for commercial use and make renovations to increase its value and profitability, Montegra understands their needs and goals and will work them to attain it.  Some banks see this as high risk but private money lenders see an opportunity and are willing to structure them value added loan to fit the project.

You can contact Montegra to know more about all this hard money loan programs as well as the other hard money lending options that Montegra offers.