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Bridge loans and APR - July 30, 2009

We had 2 listener questions this past week. The first was "How do bridge loans work?" and "What is par pricing and APR. Mortgages Made Simple logo

Bridge loans are simply a temporary loan when a person is buying a new home and hasn't sold their old home yet, that enables them to get a loan on the equity in their current home to use as the down payment on their new home. These loans were never popular due to their risky nature and barely exist now.

Par just means there are no points being charged to the borrower. APR is, of course, the annual percentage rate. You'll see this quoted all the time alongside the interest rate, and it is supposed to allow you to compare rates from different lenders. The theory being that APR takes into account the fees being charged on the loan. A 5% loan with 1 point will have a lower APR than a 5% loan with a 2 point cost.

If you have any questions you would like us to answer on our show, please call our listener line at 714-519-7833 or email

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