Helping Borrowers Buy the Home They Need: Using Bridge Loans for Short Term Financing

Published by admin at July 10, 2015

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Bridge loans are
short term loans that can help borrowers make down payments on a new home. They
can also be useful tools for developers and investors to take advantage of
untapped equity.

Bridge loan are short term loans taken
out for a period of anywhere from 2 weeks to a few years. They are dependent on longer term financing or untapped equity in a property or business enterprise. Bridge loans are usually more expensive than traditional loans because they are more risky for the lender. This higher risk usually means a higher interest rate, however bridge loans are also usually quicker to obtain and require less
documentation.

Bridge loans are similar to hard money loans in that they are usually offered by private investors or equity firms. The loan is usually not based solely on credit scores or income but rather the equity and investment opportunity involved. They are both short terms loans and
can be a good option for borrowers who need them. However, the two loans differ
in that a hard money loan is an entire loan whereas a bridge loan is a short
term loan that is in addition to other financing.

Who Benefits from Bridge Loan?

Arizona Bridge loans can be used in a variety
of different circumstances. One popular use is in real estate transactions.
Specifically, if you are selling your home and using proceeds from the sale to
fund a down payment on a new home. If you can qualify for both mortgages, you
can use a bridge loan to help fund your down payment. The bridge loan would be
the down payment portion of your new home and would be an additional loan you
obtain. Once you sell your other home, the proceeds would be used to pay back
the bridge loan. Basically, the loan would “bridge” the gap for your down
payment until you were able to sell your home.

A bridge loan can
be helpful if you home does not show well when you are living in it. A bridge
loan allows you to buy your new home with a loan for the down payment. Then you
can move out and show your home when it is vacant or add furniture and other
pieces to help stage it. This often helps a home sell more quickly than if it
is being lived in while it is on the market. If you have small children, this
is an especially attractive option because it can help relieve some of the
pressure to keep your home show ready at all times.

Another scenario
in which Arizona Bridge Loan can be a good
option is if you find your new home before you have an offer on your current
home. A bridge loan can allow you to come up with the down payment to purchase
the new home before your home sells. If the real estate market is moving fast,
or the home you want is priced competitively, that can help ensure that you
don’t lose the home while you wait for yours to sell. A bridge loan may also be
helpful if you make a contingency offer on a new home. A contingency offer is
an offer that is contingent on the sale of your home but the offer is only good
for a certain amount of time, usually 3 to 6 months. If your contingency is
running out and you don’t have an offer on your home, a bridge loan can help you
purchase the new home before selling yours.

It is important to
keep in mind that a bridge loan is a loan that is in addition to your home
financing. This means that in order to use a bridge loan to supplement a down
payment, you will need to be able to qualify for both mortgages at once. Also,
the loan needs to be paid back by existing equity in your home. This means that
once the home sells, you need to have enough money left over to pay off the
loan. Also, keep in mind that you will pay higher interest rates for a bridge
loan, just like most short term, non-traditional loans.

If you find yourself in a situation where
you could benefit from a Arizona bridge loan, risk less by working with a mortgage
broker.

A qualified mortgage broker can
help you navigate the ins and outs of bridge loans. He can also ensure that you
are working with reputable investors and equity firms. Your broker will even be
able to help you negotiate the terms of your loan to help make sure you are
getting the best deal possible. A mortgage broker will also explain an interest
rates and fees to ensure you know exactly how much the credit will cost you
each month and over the life of the loan.

Don’t let waiting on a home sale
keep you from buying your next dream home. A Arizona Mortgage Broker can help you look
into bridge loans and other short
term financing to help you make a down payment on a new home, before your
current home is sold.