Hey kid, “Ya wanna by a bridge?” Well, you may not want to buy a bridge, but you may be able to get one. A bridge loan that is. What is a bridge loan? A bridge loan is a temporary loan that allows you to borrow against your current property, which is listed for sale, in order to buy a new property, or be able to temporarily pull cash out of an investment property or second home up for sale in order to buy another investment property.
It doesn’t matter if the current occupancy is for a primary residence, second home or investment; you can get a bridge loan (as long as you meet other guidelines). The property has to be up for sale and you have to have at least 45 percent equity in the property. If you happen to have an existing equity line on the property you may not need a bridge loan as long as you have access to the money you need.
You would most likely need a bridge loan if you couldn’t qualify for standard equity lines, or if your property is up for sale. On conventional loans, once the lender finds out that your property is up for sale they will not lend you a conventional loan because they know it will be paid off early (they lose money), and that is where the bridge loan comes in. The bridge loan will allow you to pull money out of the property that is listed for sale and allow you to take advantage of other opportunities that present themselves.
I know of one major lender offering bridge loans at 55 percent of the value of the property with a minimum loan of $500,000 for one year with two six-month extensions at rates between 6.25 to 6.5 with interest-only payments. Moral of the story: You don’t have to tie up your money, and you don’t have to buy the Brooklyn Bridge, but you can borrow your own bridge in order to buy other properties.
By Carl E. Guzman, CPA
Carl Guzman, NMLS# 65291, CPA, is the founder and president of Greenback Capital Mortgage Corp. He is a residential financing expert and a deal maker with over 28 years’ experience. He currently has 168 five-star reviews on Zillow. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands! Visit www.greenbackcapital.com or email [email protected].
