An Arizona bridge loan is a
specialized type of short term loan designed to help borrowers get cash fast
and can be used to help you purchase a home. Knowing the risks, benefits, and
ins and outs of bridge loans can help you make a smart decision.
An Arizona bridge loan is a
common way for home buyers to come up with a down payment when they are buying
a new home while concurrently selling their current home. Most buyers rely on
the sale of their current home to come up with the down payment for their new
home, however, it is not always feasible or ideal to close on the current home
first. In a perfect world, you close on your home at 9:00 a.m., have funds
available by 10:00 and close on your second home before noon. But it very
rarely works this way. More often, you close on your current home and have to
find a short term rental for a month or two before you close on a new home.
This is not only expensive, but it causes you to have to move twice and you are
literally throwing money away by renting.
One solution to the problem is an Arizona bridge loan
. A bridge loan bridges the gap by lending you the down payment
for a new home that you then pay back once your home sells. The bridge loan is
secured to the buyer’s existing home. The funds from the bridge loan are then
used as a down payment on the new home. Bridge loans are gaining in popularity
as a down payment option because they offer flexible terms and are relatively
easy to qualify for. Also, many lenders will not allow you to take out a home
equity loan on a home that is listed for sale, so in many cases a bridge loan
is the only option to come up with cash for a down payment.
Like any loan, a bridge loan has certain risks and benefits. Knowing
all your options and going into it fully informed will help you risk less and
benefit more. Here are five important things to keep in mind if you are
thinking about getting an Arizona bridge
Qualification is usually an easy and painless
process. Most lenders do not have set FICO scores or debt to income ratios for
bridge loans. Instead, qualification is based on a complete picture of your
finances and whether it makes sense to purchase a home before you sell your
You will pay a higher interest rate. Like many
short term loans, bridge loans have higher interest rates than 30 year loans.
You usually have a grace period of 1 to 4 months depending on your loan terms
and if you pay the loan back with proceeds from your home sale, you can usually
avoid paying a lot of interest.
You have to be able to qualify for two
mortgages. A bridge loan can help you with a down payment, but you will still
need to qualify for two mortgages and be able to make monthly payments on both
if push comes to shove. However, most mortgages don’t require a payment for the
first month so if you sell your home quickly, you can usually avoid double
Bridge loans can help you sell your current home
more quickly. A home that is lived in is always harder to sell than one that is
vacant and staged. By moving into your new home, you will give yourself the
best chance of selling your existing home quickly and for top dollar.
You can find your new dream home without the
stress of having to sell your existing home first. You don’t have to wait or
make unattractive contingency offers. You can purchase your new home
immediately which will usually get you a better price and help make sure you
get the home you want.
If an Arizona bridge loan
sounds like a good option for you, find a
broker or private lender today to get the process started today!
At Level 4 Funding we specialize in bridge loans and other short term
loan types. Call our office today to schedule a consultation to find out if a
bridge loan is a good option for you. Don’t wait on a slow market to buy your
next dream home. Use a bridge loan to get into the home you need today.
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027