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Bridge Loan
Bridge LoanA bridge loan gets its name from the fact that it is financing meant to span, or bridge, a short-term financial gap, much like a suspension bridge spans a body of water. Bridge loans are useful in real estate transactions by making it easier for the buyer to pay for the purchased property before the buyer actually sells the home he or she is moving from. Ordinarily, money is loaned to the buyer on both properties, but only interest is collected until one of the properties is sold. The short-term bridge loan is then replaced with more traditional long-term financing. Bridge loans are also called swing loans.
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