What type of Loan has the features low LTV cash out, no payment for 6-12 months, accumulates interest and allows you to purchase another home?

What type of Loan has the features low LTV cash out, no payment for 6-12 months, accumulates interest and allows you to purchase another home?

• A. Bridge Loan
• B. Construction Loan
• C. HELOC
• D. Reverse Mortgage

Answer: (A)

Bridge loans are short-term financing that lets you buy a new home while you wait to sell the one you already own. They are designed to “bridge” the gap between purchases, so you don’t have to hold off on a new contract. Because the loan is secured by your current property, lenders typically keep the cash-out amount conservative relative to the value (a low loan-to-value) to limit risk, since the loan will be paid off when you sell. A key feature is the payment structure during the term: you often don’t make regular payments for the initial period (six to twelve months), and interest accrues on the outstanding balance to be paid when the loan matures. This arrangement allows you to proceed with purchasing another home by providing the necessary funds for the new down payment or closing, even before the first property is sold. By contrast, a construction loan funds building a home, a HELOC is a revolving line with ongoing payments, and a reverse mortgage is geared toward seniors converting home equity to cash and isn’t used to acquire another home in the same way.

Bridge loans are short-term financing that lets you buy a new home while you wait to sell the one you already own. They are designed to “bridge” the gap between purchases, so you don’t have to hold off on a new contract. Because the loan is secured by your current property, lenders typically keep the cash-out amount conservative relative to the value (a low loan-to-value) to limit risk, since the loan will be paid off when you sell. A key feature is the payment structure during the term: you often don’t make regular payments for the initial period (six to twelve months), and interest accrues on the outstanding balance to be paid when the loan matures. This arrangement allows you to proceed with purchasing another home by providing the necessary funds for the new down payment or closing, even before the first property is sold. By contrast, a construction loan funds building a home, a HELOC is a revolving line with ongoing payments, and a reverse mortgage is geared toward seniors converting home equity to cash and isn’t used to acquire another home in the same way.