Bridge loans and estate loans are two common types of loans in the finance industry. While they can be confused for the same thing, there are many differences between estate loans and bridge loans you should know about before meeting with a lender.
Estate Loans
Estate loans are a specialized type of financial product. After a person passes away and his or her estate goes through probate, the heirs cannot have access to their inheritance until this legal process is over. If funding is needed prior to the close of the probate process, lenders may be willing to provide heirs with funding to cover some of the common costs associated with closing an estate. These expenses can include any of the following:
- Paying creditors
- Making mortgage payments
- Paying off relatives
- Fixing up a property
While these loans often carry higher interest rates than conventional loans, they are usually only used as a temporary solution.
Bridge Loans
Residential bridge loans are a temporary type of loan designed to cover the period of time between the sale of a new home and the date of a new mortgage’s beginning. These loans are usually used when a buyer’s home has not been sold.
Most bridge loans are tied to the purchaser’s remaining home. After the buyer acquires a bridge loan, the funds are used as the down payment for the new property.
Buyers should be careful to not obtain a bridge loan unless they are positive their existing home will sell. While there is risk involved, this type of loan can make a buyer’s move-up offer more attractive to sellers.
Speak With a Trusted Advisor
A professional in the financial industry can help you understand they key differences between bridge loans and estate loans. If you are looking for bridge loan lenders in California, take a look at the North Coast Financial website for further information.
