An Arizona Bridge Loan is a type of short-term funding used in real estate. Thanks to market changes and consumer demand, it’s making a big comeback.
There’s a lot of misinformation on the net about what an Arizona Bridge Loan is and how it works; so much so that oftentimes investors don’t know if and when it’s appropriate to leverage one. This form of lending works well when someone is trying to bridge a gap in funding for a short period of time. They often have 6-month or 12-month terms, though some lenders offer terms of five years or more. Usually, the borrower only pays interest during the term, and then pays off the balance when the term ends, and funding is quick—much quicker than other forms of lending like mortgages, which can take three months of more. It’s often believed that you have to have excellent credit to qualify. This is true some of the time, particularly if you’re working with a bank, but alternative lenders routinely work with people who don’t have good credit.
There are many situations in which this form of lending could be beneficial. For example, a real estate investor might use it to make an initial purchase because he knows he’ll get funded quickly, so he can grab a deal before someone else does. In this case, he’ll likely refinance the property or resell it within a matter of months. An investor might also use one if he’s purchasing a multi-family property, but plans to bring on a more investors. Private homeowners sometimes use them as well, especially when they want to move into a new home while they’re waiting on their old home to sell. Using this financial tool, they can pay off their prior mortgage and possibly make a down payment on the new place with one.
With so many uses and benefits, one might wonder why they fell out of popularity. In reality, they never really did with investors. However, private individuals struggled with them during the early 2000s, around the time of the housing collapse. People were using them to get into new homes. The problem was, when the market started collapsing, their old homes stopped selling. The homeowners would wind up with two homes and loans they couldn’t afford, and so these loans fell out of popularity in the consumer market.
Due to Market Shifts, Potential Pitfalls are Declining and Security is Increasing
The housing market has obviously recovered and there are now even housing shortages in some areas. That means opting for an Arizona Bridge Loan is a safer option for private homeowners than it once was because their old home will likely sell much faster. Because of this, more people are leveraging this form of funding; both in the private and commercial sectors.
If you’re on the verge of securing a great deal, alternative lending can help you have a great year too.
Start with the mindset of an investor when dealing with any kind of financial product. Good investors have a solid exit strategy and contingency plans. They get into an investment only after research, but also prepare for issues like not being able to refinance or not having a new buyer for a property. This in mind, you can secure an Arizona Bridge Loan that will help overcome your short-term funding gaps and make this year your strongest yet.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | 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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.