What is a bridge loan typically used for?

A bridge loan is a short-term financing option specifically designed to provide funds to homeowners or real estate investors while they transition from one property to another. The primary use of a bridge loan is to facilitate the purchase of a new property before the current one is sold. This type of loan "bridges" the gap between the immediate financial need and the longer-term financing options that will come once the original property is sold.

This form of financing is particularly valuable in real estate transactions where timing is essential, allowing buyers to secure a new property quickly without having to wait for the sale of their existing home. The bridge loan is usually secured by the equity in the current property, which makes it a viable option for many individuals looking to capitalize on favorable market conditions or avoid missing out on a desirable purchase.