Financing a new home purchase while waiting for the old one to sell can be challenging. Bridge loans offer an effective solution to this common problem for your clients.
I call this my "MOVE NOW" program..
So, what is a Bridge loan? A Bridge loan is a short-term financing option designed to allow borrowers to “bridge” the gap between selling their old home and buying a new one. Until they secure more permanent financing, a Bridge loan will provide temporary funds between the sale of the old property and the acquisition of a new one.
General Features of Bridge Loans:
- Terms: Generally, Bridge loans have terms ranging from six months to three years.
- Security: These loans are usually secured by collateral, often the property being sold or purchased.
- Interest Rates: Because bridge loans are short-term, they usually have higher interest rates compared to traditional loans
How Do Bridge Loans Work?
Bridge loans function by providing temporary financing until the borrower can secure permanent financing or sell their existing property. Here’s a simplified scenario:
A borrower wants to purchase a new investment property before selling their current one. They can take out a Bridge loan, which provides the necessary funds for the down payment on the new home.
Once the current property is sold, the funds from the sale are used to pay off the Bridge loan.
Comparing Bridge Loans to Traditional Loans
Bridge loans differ from traditional loans in several ways:
- Term Length: Bridge loans are short-term, while traditional loans can span decades.
- Purpose: Bridge loans are designed for transitional periods, whereas traditional loans cater to long-term needs.
- Approval Process: Bridge loans may have a faster approval process, accommodating the urgency often associated with them.
Bridge Financing Program
Unlike typical Bridge loans that require immediate repayment, BOOST allows borrowers to defer payments for up to twelve months, providing financial breathing room during the transition period. Plus, BOOST refinances existing liens without adding monthly payments for the Bridge loan, keeping your client’s debt-to-income ratio unaffected when applying for a mortgage on their new home and simplifying the approval process.
Better yet, clients have up to twelve months to improve, repair, and stage their current property, allowing them to secure the best possible sale price.
Besides when a borrower wants to buy before they sell, what other scenarios make BOOST a smart choice? When quick funding is needed, or when a borrower needs to make a competitive, non-contingent offer in a hot market.
- Pay Off Existing Liens: LendSure will pay off the existing lien and provide cash out for the new home.
- Use Equity for Down Payment: Borrowers can use the equity from their current home for the down payment on their new home.
- Balloon Payment: A balloon payment is due in twelve months for owner-occupied properties and six months for non-owner-occupied properties.
- Exclusive Offer: The BOOST program is only available in conjunction with financing the purchase of a new home.
The Loan Whisperer Way
It’s simple. We make loans that make sense. We’re not in-the-box lenders. Of course, there are numbers ratios, and data to consider, but we know that behind every file, there’s an individual with a unique circumstance seeking a loan. We work hard to offer our common-sense take on lending to borrowers seeking funding for the home of their dreams, another addition to their investment property portfolio, or refinancing of a currently-owned property.
Are you ready to benefit from a commonsense approach to lending? Contact us today to learn more about non-QM loans and how partnering with Xpert Home Lending can help grow your bottom line.
