Private Hard Money Lender in California, Texas and Arizona: How to Save Money and Buy a House With an Arizona Bridge Loan

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Thursday, January 28, 2016

How to Save Money and Buy a House With an Arizona Bridge Loan

An Arizona bridge loan is a special type of loan that can help you buy a new home. It is important that you know your options and what the risks and benefits of a bridge loan are so that you can make an informed financial decision. 

An 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, an Arizona 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. However, keep in mind that you will still need to qualify for two mortgages so make sure all of your financial ducks are in a row. 

Important Things to Consider when Thinking About an Arizona Bridge Loan

If an Arizona 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.       An 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. An 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.

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

An Arizona 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!

Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 

Texas Tel:      (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701    

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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 38 years. They have 2 beautiful daughters 4 amazing grandchildren. Dennis has been an Arizona resident for the past 32 years.