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