In certain types of real estate markets, Arizona Bridge Loans are popular and serve both investors and home owners. If you are currently in an existing home and want to purchase another home before your existing one sells, this type of loan offers an optimum short-term loan that can help you achieve this goal.
Understand that Arizona Bridge Loans are not without risk. These loans are not permanent loans. They are meant to be short term in nature and, as the name implies, “bridge” the gap between the existing home and the new home mortgage. They are secured by the existing residence. In reality, you are borrowing your down payment.
Set guidelines are not established by all lenders, such as minimum FICO score and debt to equity ratios. Funding of the loan is approached by underwriting as lenders determine if the loan “makes sense.” The key to the loan is that long term financing is obtained on the new home. The loan payment may be excluded by some lenders for qualifying purposes. Most borrowers have an existing loan on the current residence; so many lenders will add the two mortgage payments together. Most buyers are going to close on the new home before they sell their existing residence.
Higher debt to equity would be accepted by a lender if the mortgage for the new home is a conforming loan. If the new home is a jumbo mortgage, then the lender will restrict the buyer to a 50% debt to equity ratio. There are fees associated with Arizona Bridge Loans. Interest rates can fluctuate and vary depending on lender and location. Some of the fees that a borrower will need to pay are:
1. Administration fee
4. Title Policy
5. Wiring Fee
6. Notary Fee
Based on the amount of the loan, there may be an origination fee. There may be points charge of 1% of the loan or more.
In a “move up” home, if you are tight on cash and your existing home has not sold, you can finance the down payment by taking out a home equity loan or a bridge loan. In a tight market, waiting until your home sells can result in the loss of your dream home that just hit the market. After all, buyers will prefer a full offer over one that contains a contingency. If you proceed in purchasing a home before the existing one sells, then be prepared to pay two mortgages. Bridge loan benefits include the following:
· You can buy without restrictions and immediately put your existing home on the market
· You may be given a few months grace period on a bridge loan before the first payment is due
· When you place the bid for the new home, you remove the contingency when making the offer for the new home
Bridge loan drawbacks include:
· Home line of credit costs less than Arizona Bridge Loans
· A stringent requirement that the buyer may not qualify for is that they can meet the financial requirement to pay two mortgages
As with all loans, various lenders, particularly private and Arizona Hard Money Lenders, offer various rates and terms along with underwriting processes and qualifying demands. At Setabay, we have streamlined the process and can let you know the status of your application in as little as 24 hours. Call us for a no-obligation quote.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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