Definition
A short-term loan (typically 6-12 months) used to bridge the gap between buying a new home and selling your current one. Bridge loans allow you to use the equity in your current home as a down payment on a new purchase before your old home sells. They carry higher interest rates (typically 2-4% above standard mortgage rates) and origination fees due to the short-term, higher-risk nature of the loan.
Related Mortgage Terms
- Closing Costs
Fees and expenses paid at the finalization of a real estate transaction, typical...
- Down Payment
The upfront portion of the home's purchase price paid in cash by the buyer. Conv...
- Equity
The difference between your home's current market value and the remaining mortga...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.