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 
dennis@level4funding.com
www.Level4Funding.com

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

111 Congress Ave |Austin | Texas | 78701    

  

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.

How to Get a Bridge Loan Arizona Financial Experts Trust

According to many experts, you only need a few things to sell your house, a bridge loan, Arizona real estate agent, and a good price. If you are interested in learning more about how to make your home selling dreams come true, a bridge loan might be the right option for you and your family. 

Selling a home while you are still living in it can be a nightmare, especially if you have kids or pets. Keeping the home show worthy, leaving for each showing, and simultaneously looking for a new home to move into is enough to make anyone lose their mind. If you find yourself in this situation, you may think there is no other option. After all, even if you can qualify for two mortgages, most sellers rely on the sale of their current home to finance the down payment on the new home they are purchasing. 

If you need the proceeds from the sale of your current home to use as a down payment on a new home, there is an option that can help you move before you sell. You can get a bridge loan Arizona real estate experts recommend to finance your down payment. 

A bridge loan is exactly what it sounds like, it helps bridge the financial gap between selling your current home and needing a down payment for a new home. With a bridge loan, Arizona families can borrow the down payment for the new home using their home that is up for sale as collateral. Once your home sells you pay back your bridge loan. Usually this time frame is so short that many borrowers don't even end up paying interest on their bridge loan. 

With a bridge loan, Arizona borrowers benefit from being able to sell their home more quickly and with less hassle. A vacant home shows better than one that is filled with clutter and you don't have to worry about scheduling showings. You can be in your new home while your home is still on the market. 

3 Things you Need to Know About A Bridge Loan Arizona Home Sellers Use To Finance A Down Payment

A few things you should know about bridge loans before you apply. Firstly, you have to have fairly good credit and a pretty high income. Not for the bridge loan itself, but you have to be able to qualify for two mortgages because, for a short time, you will own both homes. There are ways around this using ARMs and hard money loans, so talk to your financial professional if you don't meet this criteria. 

Secondly, you need to know that you can't walk into a bank and request a bridge loan. A bridge loan is a specialized type of loan that is usually given by a private money lender. The closest thing a bank has to offer is a home equity loan but most banks won't give out this type of loan on a property that is for sale. Your best bet is to find a company for a bridge loan Arizona financial experts trust like the licensed brokers at Level 4 Funding. 

Finally, bridge loans are short term loans, meaning they have higher interest rates than traditional mortgages. However, talk to your loan officer about a longer grace period. Often, you end up selling your home before your grace period is over and don't even have to make a payment on your bridge loan. 

Once you have decided that a bridge loan Arizona is the right help for you, contact a private money lender to get the process started today!

Call our experts at Level 4 Funding to get your bridge loan financed today. Don't delay your move or make selling your home more stressful than it needs to be. With a bridge loan you can move today!

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
dennis@level4funding.com
www.Level4Funding.com

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

111 Congress Ave |Austin | Texas | 78701    

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.

Bridge Loan for Owner Occupied Home - How does it work?

HOW DOES A BRIDGE LOAN WORK

Bridge Loans are Asset-based loans (ABLs). These loans are revolving lines of credit or term loans that are secured by the borrower’s assets such as a real estate.

How much credit a borrower can access is primarily determined by the quality and value of the collateral, which can range from accounts receivables and inventory to equipment and real estate.

For a real estate a bridge loan transactions is to finance the initial construction of a dwelling with a terms of twelve months or less, such as a loan to purchase a new home where the consumer plans to sell a current dwelling within twelve months.

Reasons to take a Bridge Loan:

•   Move before you sell your current home
•   A better alternative than obtaining an equity partner
•   Bridge the gap, while waiting on conventional financing
•   Down payment to begin a build-out project
•   Acts as a line of credit with access to 5 loan drafts over 120 days
•   Equipment purchasing
•   Cash flow stabilization
•   Working capital
•   Acquisition
•   Turnaround financing
•   Capital expenditures
•   Debtor-in-possession (DIP) financing
•   Growth
•   Recapitalization
•   Refinancing/restructuring
•   Buyout
•   Leveraged employee stock ownership plan (ESOP)

Benefits of Bridge Loan:

•    Fast and convenient
•   Saves money
•   Flexible
•   Keeps you in control of your business

CFPB Renewal Temporary or “Bridge Loan” 
12 CFR Part 1026 (Regulation Z)
§1026.43 Minimum standards for transactions secured by a dwelling.

Under § 1026.43(a)(3)(ii), a temporary or “bridge” loan with a term of 12 months or less
is exempt from § 1026.43(c) through (f)    (known as the seven gate of hell)

What are the sections of CFPB?

§1026.43(a) Scope
§1026.43(b) Definitions and under this section you find this information:
§1026.43(a)(3)(ii)  exempt for bridge loan the following sections

§1026.43(c) Repayment ability
§1026.43(d) Refinancing of non-standard mortgages
§1026.43(e) Qualified mortgages
§1026.43(f) Balloon-payment qualified mortgages made by certain creditors

The following sections still apply to bridge loans:
§1026.43(g) Prepayment penalties
§1026.43(g) Evasion; open-end credit.

What is the definition of a “Bridge Loan”?
It is a temporary or “bridge” loan with a term of 12 months or less, they are:

  such as a loan to finance the purchase of a new dwelling where the consumer plans to sell a current dwelling within 12 months or a loan to finance the initial construction of a dwelling;

  a loan to finance the purchase of a new dwelling where the consumer plans to sell a current dwelling within 12 months and a loan to finance the initial construction of a dwelling.

  1026.35(c)(2)(v) A loan with a maturity of 12 months or less, if the purpose of the loan is a “bridge” loan connected with the acquisition of a dwelling intended to become the consumer's principal dwelling.

  1026.32(d)(1)(ii)(B) A loan with maturity of 12 months or less, if the purpose of the loan is a “bridge” loan connected with the acquisition or construction of a dwelling intended to become the consumer's principal dwelling; or

  1026.35(b)(2)(i)(C)A temporary or bridge loan with a loan term of twelve months or less, such as a loan to purchase a new dwelling where the consumer plans to sell a current dwelling within twelve months; or

  1026.43(a)(3)(ii)A temporary or “bridge” loan with a term of 12 months or less, such as a loan to finance the purchase of a new dwelling where the consumer plans to sell a current dwelling within 12 months or a loan to finance the initial construction of a dwelling;

Things to consider when doing a bridge loan.

A creditor must determine in each case if the transaction is primarily for an exempt purpose. If some question exists as to the primary purpose for a credit extension, the creditor is, of course, free to make the disclosures, and the fact that disclosures are made under such circumstances is not controlling on the question of whether the transaction was exempt.

FACTORS. In determining whether credit to finance an acquisition—such as securities, antiques, or art—is primarily for business or commercial purposes (as opposed to a consumer purpose), the following factors should be considered:

GENERAL.
1.The relationship of the borrower's primary occupation to the acquisition. The more closely related, the more likely it is to be business purpose.

2.The degree to which the borrower will personally manage the acquisition. The more personal involvement there is, the more likely it is to be business purpose.

3.The ratio of income from the acquisition to the total income of the borrower. The higher the ratio, the more likely it is to be business purpose.

4.The size of the transaction. The larger the transaction, the more likely it is to be business purpose.

5.The borrower's statement of purpose for the loan.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:     (512) 516-1177
www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
   
 Equal Housing Opportunity. *APR varies from 9.6 – 12.5% **Contingent on valuation and site inspection. We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin. This is not a Good Faith Estimate (GFE) and should not be considered as such. Costs, rates and terms can only be determined after completion of a full application. Mortgage rates could change daily. Actual payments will vary based on your individual situation and current rates. Products are available in Arizona only. To get more accurate and personalized results, please call (623) 582-4444 to talk to one of our licensed mortgage experts. Terms and conditions of this and all loan programs are subject to change without notice. Level 4 Funding LLC is licensed in the State of Arizona, NMLS 1018071 AZMB 0923961.