A bridge loan is a short-term financing solution used to bridge the gap between the termination of one loan and the commencement of another loan. Typically employed in real estate, bridge loans allow borrowers to meet liquidity requirements while awaiting long-term financing.
A mortgage commitment is an agreement between a lender and a borrower to lend money at a future date, subject to the conditions described in the agreement. It is a critical step in the home-buying or construction process, which signifies the lender's intention to offer financing upon meeting specific requirements.
A Standby Fee is a sum required by a lender to provide a Standby Commitment. The fee is forfeited if the loan is not closed within a specified time.
Takeout financing refers to the commitment to provide permanent financing following the construction of a planned project. It typically requires specific conditions to be met, such as achieving a certain percentage of unit sales or leases. Most construction lenders mandate takeout financing to ensure the construction loan is 'taken out' by a permanent loan post-construction.
