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.
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.
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.
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
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.
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
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.
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!
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
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
23335 N 18th Drive Suite 120 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701