What is a Bridge Loan? In Layman’s Terms

[Corey Dutton]

Most people in this group know the answer to this question. But most of the general public has no idea what a bridge loan is. In fact, I was at a BBQ this weekend when someone asked me what type of loans I provide and I said, “bridge loans.” He really thought I provided loans to construct bridges !! This was embarrassing to have to explain to him actually. But it dawned on me that most people just don’t speak the real estate lingo.

Simply put, a bridge loan is nothing more than a short-term, interim loan that “bridges” you to the next stage of financing, or hopefully, permanent financing. It is typically more expensive than a bank loan, but can fund more quickly than a bank loan. A bridge loan is commonly used to take advantage of opportunities that will go away if funding is not immediately available.

Although I’ve pretty much defined it, would anyone like to define a bridge loan in more layman’s terms? Or, have you used a bridge loan recently for a project or a purchase? Please share how you used this loan to accomplish specific goals.