Risks and Benefits of an Arizona Bridge LoanAugust 26, 2015
Risk Less: Choose the Right Lender for your Self Employment Home LoanAugust 26, 2015
Arizona bridge loans are gaining popularity in the housing market as a way to bridge the
down payment gap and allow buyers to purchase a new home before selling their
current home. They are also a valuable tool for small business owners to get
cash quickly based on business collateral and upcoming deals.
Arizona bridge loans are short term
loans that are designed to bridge the gap between needing liquid cash and a
future investment paying off. The most common use of Arizona bridge loans are during the home buying process to bridge
the gap between needing a down payment for a new home and selling a current
home. The bridge loan is secured to the original home, the one that’s on the
market. The funds from that loan are used as the down payment for the mortgage
on the new home.
There are no strict guidelines when it comes to Arizona bridge loans so credit score
and debt to income ratio are not usually factors that will automatically
disqualify you. This is good news for borrowers with less than stellar credit
or who may have a high debt to income ratio once they purchase their new home.
Instead, bridge loans are based on a few different factors, including how
likely it is that you will sell your current home quickly, and whether or not
you can make both mortgage payments for a short time if it becomes necessary.
If you default on a bridge loan, the lender has recourse to get their money
back using the property you have on the market because it is the one that
secured the loan.
A bridge loan can be a good option for individual borrowers who want to
purchase their next dream home but have not sold their current home. A bridge
loan usually has a higher interest rate but certain loans allow you to skip
payments, making it unlikely that you will have to pay any of the interest as
long as you sell your home quickly. A bridge loan also allows you to put your
home on the market quickly and without any schedule restrictions. You can even
stage it to make it sell more quickly. A vacant home will usually sell more
quickly and for top dollar so a bridge loan can help you earn more money on
your home sale.
A less common but still beneficial use of Arizona bridge loans is to help your small business when you are
strapped for cash. Sooner or later most business experience a cash flow issue.
A bridge loan can help “bridge” the gap
between today’s need for immediate cash to pay bills and the final closing of a
pending investment deal or long-term financing package.
If you find that you need some immediate cash
before a big deal pays out, a bridge loan can be a good solution for your
business. In order to secure the loan you will need to prove your ability to
pay the loan back. A few ways to do that is through:
· Earnings. It is possible that a lender may be willing to extend a bridge
loan on the basis of earnings alone. You will need to have a stellar credit
history, a consistent track record of making profits, and strong sales to show
you can repay the loan in a short amount of time. Unless you are able to
fulfill all of these requirements, you will need to find another way to obtain
· Collateral. If your
earnings aren’t up to par, you can use business assets as collateral to obtain
a bridge loan. Equipment, real estate, and other capital assets can all be used
to secure a bridge loan.
A broker can help you navigate the ins and outs of Arizona bridge loans whether you need one for business or real
estate. Having the right financial professional by your side can help you risk
less and benefit more. You can get the cash you need and help protect your
current assets. Call our office today for more information on Arizona bridge loans.
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Phoenix AZ 85027