How do bridge Loans make buying new property easier?

 

What will you do when you want to move to a bigger house, and your current house is not yet on the market? Do you want an endless number of days to see how the market fares, then call a realtor and then wait for the sale to happen? It can take from months to years. What happens if your dream home is off the market by the time you sell your current home and get the cash?

It is a conundrum most Americans face who are looking for a home upgrade.To ease your worries, we are here to tell you about bridge loans. These are quite awesome yet lesser-used strategy in the real estate business. A bridge loan allows you to access an alternative option to people shopping for a new home.

A few questions you must ask about bridge loan –
The concept of the bridge loan is not new. Although it is much less explored. To help you find out the best bridge loan options, here are five questions you must ask when you are looking for a loan company –

1. What is the term length of a bridge loan?

Terms for bridge loans are usually short. While some are as short as four months, some lending parties often have lenient term periods of up to 12 months. The standard term is six months for most loan companies. The Bay Area Title Loan will easily negotiate on a suitable term length that suits your interests. We are one of the few lenders who allow room for flexibility and extend payment terms to up to a couple of years.

2. Is a bridge loan secured?

A bridged loan is a secured loan that uses your old house as collateral. It means we won’t check your credit scores or bank records before we approve your loan. We use the equity in real estate property as collateral.

3. What factors does a loan company evaluate before sanctioning a bridge loan?

We analyze the current value of your property and the after repair value. It helps us determine the loan to value amount. You will also need to help the lending parties understand how you are planning to pay back the loan amount.

4. What factors does a loan company evaluate before sanctioning a bridge loan?

The apparent restriction of a bridge loan is the payment term. As we have stated before, some companies have termed as short as four months. At The Bay Area Title Loans, you will find it must be easier to negotiate payment terms. We offer an easy extension of term periods without penalties.

5. How do the loan companies calculate the loan amount?

Some lenders often provide an amount close to only 65% to 75% of the collateral property’s value. It is a serious limitation considering you are planning to upgrade. The BATL always strives to provide a minimum value of 80% of your current property value to help you bridge the gap between selling your old property and buying a new property.

Bridge loans are extremely useful when you are looking to upgrade your lifestyle, but the purchase and sale processes do not overlap. This kind of financing is a small term loan that will help you make a big move at a small cost. When you are standing on the brink of a major change that will affect you and your family, it is very common for you to wonder about the pros and cons of your financing options. This kind of financing has its pros and a few cons that you should know about –

Pros of bridge loan financing –

1. It is short-term: we are aware we already stated it as a downside; however, this is a blessing in disguise. It is a short-term expense. This will, of course, cost you less and help your more, in contrary to mortgage loans and education loans that create an indelible dent in your finances.
2. Choose your repayment options: you can choose to repay your loan in two modern ways. You can pay off the amount before the permanent financing is secure. In this case, you can pay it off within a given term. If you pay it off before the term expires, your credit score will significantly improve. If you pay it after the permanent financing is secured, a portion of your permanent funding will pay for the bridge loan.
3. Flexibility: you can decide your terms, you can negotiate on the interest rates and you will get the best possible amount depending on the current value of your real estate. You can forget about closing the sale of your current home before you can move to a new home of higher market value. A bridge loan helps you move more smoothly.
4. They are non-recourse: the lending party will seek payment through property only.You have no “personal responsibility” to pay the loan amount back to the lender. It is true even if the resale value of your current property does not cover your remaining loan balance.

Cons of bridge loans –

1. Steeper rates: with great flexibility, comes higher interest rates. It is one con most borrowers will simply have to deal with because finding real terms and loan amounts with bridge loans is quite challenging. However, since the repayment terms are short, you will find it much easier to pay the interests as compared to other loan types.
2. The Loan Amount: the amount is not fixed. The shape of your current property and of course the current real estate market will determine the loan amount. Sometimes, borrowers can lose out on hundreds of dollars due to the playful nature of the market pricings.

There are a few disadvantages of bridge financing, but that should not keep you from moving to a better home with better amenities. The BATL is here to help your bridge the gap when the sell and purchase do not overlap. To get the best deals on bridge loans in the market check out the https://bayareatitleloans.com/.