5 Things You Need to Know About a Texas Bridge Loan

A Texas bridge loan is a
special type of short term loan that can help you buy a new home. It is
important that you know your options and fully understand the terms of your
loan to make an informed decision.

A Arizona bridge loan is a
specialized short term loan that can be useful for real estate transactions. It
is a short term loan that allows you to use the equity in your current home as
a down payment on a new home before your current home sells. As the name
implies, a Texas bridge loan is
designed to “bridge” the gap by giving you funds for a down payment. The loan
is paid back with the proceeds from you home sale.

A bridge loan can be very beneficial in many ways because it allows you
to buy a new home and put yours on the market without any restrictions. When
you are living in a home while you are trying to sell it, scheduling showings
can be a nightmare, especially if you have pets or kids. It is also difficult
to keep your home show ready and leave at a moment’s notice. Many buyers will
also have trouble picturing themselves in your home while your stuff is there. A
bridge loan can allow you buy another home while yours is still on the market
by fronting you the down payment.

An additional benefit of a bridge loan is that it is relatively easy to
qualify for. There is not a lot of paperwork and since many borrowers will have
a high debt to income ratio because they own two homes for a short period of
time, debt and credit scores are not as important as they are in traditional
loans.

Important Things to Consider when
Thinking About a Texas Bridge Loan

If a Texas bridge loan sounds
like it might be a good option for you, it is important to know all of the
risks and benefits and know the ins and outs of your loan terms. Make sure you
are in the driver’s seat and in control of your loan at all times. Here are a
few things to keep in mind.

1.
A Arizona bridge loan may have a high interest rate. Since a bridge loan is a short
term loan and is secured by the sale of your current home, the lender is taking
a fairly significant risk in extending you the credit. The more risky the loan,
the higher the interest rate. Although interest rates do fluctuate, you can
expect to pay more than the prime rate and your rate could climb as high as the
double digits.

2.
You can avoid paying interest. Although the loan
itself has a high interest rate, shopping around for the right loan can help
you avoid paying any interest at all. Many bridge loans allow you to skip the
first few months of payments. If you can sell your home during this time
period, you can pay the loan back before any interest accrues.

3.
There will be fees. A Arizona bridge loan has several fees associated with it. You will
pay an administration fee of about $750 and an appraisal fee on your current
home to ensure it is worth what you need to sell it for. In addition, you will
pay wire fees, origination fees, and points which will be dependent on the
amount of your loan. When all is said and done you will probably end up paying
about $2,000 to secure your bridge loan. For most borrowers this is well worth
it to get them into their new home sooner rather than later. Also, keep in mind
that the fees will vary depending on your lender so shop around.

4.
A bridge loan can cause stress. If your current
home does not sell quickly, you will end up paying the mortgage on it, the
mortgage on your new home, and the payment on your bridge loan. Make sure to
carefully evaluate your finances to ensure that you can make your payments for
a short time if you need to. You can also help eliminate financial stress by
pricing your current home to sell quickly.

5.
A bridge loan can save you money. If you wait to
purchase your new home until your old home sells, you may end up needing a
short term rental. This is literally throwing money down the drain. Getting the
right Texas bridge loan and selling
your current home quickly can actually save you quite a bit of money.

If a Arizona bridge loan sounds like a good option for you, start
looking at your options today!

A Texas mortgage
broker or private lender can help you get started on getting your bridge loan.
Call our office today to schedule an appointment. You will be glad you did!