What exactly is a bridge loan? The definition of a bridge loan is “a sum of money lent to cover an interval between two transactions, typically the buying of one house and the selling of another.”
Basically, what this breaks down to is if you don’t have enough income to cover two mortgages at the same time, you can use a Arizona bridge loan to pay off your initial mortgage while you wait on the property to sell—all the while being able to purchase your new property. Bridge loans are short-term loans that borrowers can qualify for a mortgage on their new house before the Arizona bridge loan is paid off.
Bridge financing is a short-term method of financing that is interest-only. Typically, borrowers can receive their funds in less than one week—and very often within 48 hours of approval. It is a secured form of lending that is backed by property—meaning that if a borrower defaults on the loan their property can be repossessed by the investor. Bridge loans can be used for a variety of purposes that include both residential and commercial properties. A common Arizona bridge loan scenario is when the borrower is selling their primary residency, but has found a new home and the seller doesn’t want to wait on the sale of the initial home— a Arizona bridge loan can secure the sale. Also, many times borrowers need fast access to capital in order to obtain permission for a new development. Sometimes, a property is not inhabitable (typically, a fix-and-flip) and a traditional bank will not approve a mortgage.
Texas Hard Money Lenders will approve borrowers with poor credit for an Arizona bridge loan. Because these loans are asset-based a borrowers credit is not as important. These loans are interest-only until the end of the loan term—meaning a borrower only pays the interest throughout the life of the loan and at the end a balloon payment is required. In case of default the lender can repossess the property and sell it in order to get their money back.
WHY GET AN ARIZONA BRIDGE LOAN?
Unlike a traditional bank, a hard money lender does not require excellent credit. However, they will look at your credit score. Texas Hard Money Lenders use collateral to secure the loan. The collateral, which is your property, reverts to the hard money lender that if the borrower defaults the home will go into foreclosure.
Borrowers usually choose a Arizona bridge loan due to the ease of the application and the speed of financing. A borrower can be approved same day and funding can be released in less than a week. However, this convenience does have a cost—slightly higher interest rates. Most borrowers don’t mind this, as they are only short-term loans. Hard money loan terms are usually around one year, but can be extended up to five years.
Bridge loans are an excellent resort to a temporary situation.
When you are searching for a home and you find that perfect home—but you can’t buy it until you sell the home you already have—that can be heartbreaking. Especially, when the seller refuses to wait on the sale of your initial home. This is where a bridge loan can save the day—even with poor credit a hard money lender can help make your dreams come true!
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.