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Wednesday, July 29, 2015

How to Use Arizona Bridge Loans When You Are Buying and Selling a House

When you are needing to move, buying a new home while selling your existing home can be a stressful and complicated process. Often you need to sell your current home to finance the down payment on your new home. Short term Arizona bridge loans can be a valuable took to ensure you are able to buy the home you want and sell yours more easily.

                When you buy your first home, you probably don’t think too much about the timing other than issues like no one wants to move in the summer or when your lease is up at your current rental. However, once you are looking to upgrade from your starter home to something larger, timing become essential. Most buyers need to use funds from their current home to fund the down payment on their new home. In an ideal world, you would be able to close on your home in the morning and close on your new home the afternoon of the same day. This sounds ideal but it rarely happens. Due to market conditions and the stress of showing a home, trying to sell and buy at the same time can seem almost impossible.

                You may find yourself stuck between a rock and a hard place. Although you can qualify for both home loans, you can’t produce a down payment for the new home without selling your existing home. Your home may not be getting any offers because a lived in home does not show as well as a vacant or staged home, but you need somewhere to live until you can purchase a new home. Arizona Bridge loans are a specialized type of short term loan that can help.

                Arizona Bridge loans are short term loans meant to help bridge the gap between selling your home and buying a new property. A bridge loan is a short term loan that you can get in addition to a home mortgage to cover the down payment. You will make payments on the bridge loan until you sell your first property and can pay the loan back in full. The bridge loan is contingent on the equity in the home that you are selling. Arizona Bridge Loan have low debt to income ratios and no set amount of paperwork for closing. Rather than being based on a FICO score or income number, bridge loans are based on what makes sense for each financial situation.
               

Benefits of Arizona Bridge Loans


Bridge loans have several benefits for the borrower. Namely, they allow them to put their existing home on the market without being inconvenienced with appointments for showings. Because the owners have already purchased and moved into their new home the home on the market can be decluttered and staged for optimum showing. Staged homes sell more quickly and for higher dollar amounts that homes that are lived in during showings. If getting top dollar for your home is your goal, a bridge loan may help you move into your new home so that your existing home shows at its best.

Another benefit of a bridge loan is that many do not require payments for a couple months. Some mortgage brokers can get deals where you won’t make payments on a bridge loan for up to four months. If you are able to sell your home during that time you won’t ever have to make a monthly payment on the bridge loan as you can use the cash you get from selling your home to pay it off.

Bridge loans can also be helpful if you find “the one” before your home sells. You can always make a contingency offer, meaning that you will purchase the home when yours sells. However, if you are in a multiple offer situation or a seller’s market, having a contingency offer accepted can be tricky. A bridge loan gives you the cash you need to buy the home before your home sells

Risks of Arizona Bridge Loans


                Although there are many benefits of bridge loans, there are also some drawbacks and risks. First and foremost, it is important to keep in mind that bridge loans usually have higher interest rates and fees. Interest rates vary depending on market conditions. Talk with a mortgage broker to choose the best loan terms for your unique financial situation.

                In addition to bridge loan payments, keep in mind that you will also have to pay two mortgage payments until your other property sells. This can cause stress for some families if they are stretched too thin with payments. Pricing the home you are selling competitively can help make it sell faster and alleviate some of this stress. Also, you will need to be able to qualify for both home loans at the same time since you will be carrying both for a short period. This can be difficult for some borrowers. A mortgage broker can help find programs that will make this possible.

                If a bridge loan sounds like a good option for you, find a mortgage broker in Arizona to get started on the application process. 


Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917

www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027



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