Texas Hard Money Lender: How to Use a Texas Bridge Loan to Make Your Dreams Come True

If you are trying to buy and sell a home at the same time, a Texas bridge loan can be a valuable tool to have. This type of short term learn can help make sure that you get your dream home with very few risks.

A Texas bridge loan is a 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, a Texas 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.

An Arizona bridge loan is a valuable tool because most buyers rely on the sale of their current home to come up with the down payment for their new home, however, it is not always feasible or ideal to close on the current home first. In a perfect world, you close on your home in the morning, have funds available by noon and close on your second home before the business day is over. But it very rarely works this way. More often, you close on your current home and have to find a short term rental for a month or two before you close on a new home. This is not only expensive, but it causes you to have to move twice and you are literally throwing money away by renting.

One solution to the problem is an Texas bridge loan. A bridge loan bridges the gap by lending you the down payment for a new home that you then pay back once your home sells. The bridge loan is secured to the buyer's existing home. The funds from the bridge loan are then used as a down payment on the new home. Bridge loans are gaining in popularity as a down payment option because they offer flexible terms and are relatively easy to qualify for. Also, many lenders will not allow you to take out a home equity loan on a home that is listed for sale, so in many cases a bridge loan is the only option to come up with cash for a down payment.

7 Things to Consider if You are Thinking About a Texas Bridge Loan

Like any loan, a bridge loan has certain risks and benefits. Knowing all your options and going into it fully informed will help you risk less and benefit more. Here are five important things to keep in mind if you are thinking about getting an Texas bridge loan.

1. You will pay a higher interest rate. Like many short term loans, bridge loans have higher interest rates than 30 year loans. You usually have a grace period of 1 to 4 months depending on your loan terms and if you pay the loan back with proceeds from your home sale, you can usually avoid paying a lot of interest.

2. Qualification is usually an easy and painless process. Most lenders do not have set FICO scores or debt to income ratios for bridge loans. Instead, qualification is based on a complete picture of your finances and whether it makes sense to purchase a home before you sell your current one.

3. A bridge loan can save you money. If you wait to purchase your new home until your old home sells, you may end up needing a short term rental. This is literally throwing money down the drain. Getting the right Texas bridge loan and selling your current home quickly can actually save you quite a bit of money.

4. There will be fees. An Texas 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.

5. You can find your new dream home without the stress of having to sell your existing home first. You don’t have to wait or make unattractive contingency offers. You can purchase your new home immediately which will usually get you a better price and help make sure you get the home you want.

6. You have to be able to qualify for two mortgages. A bridge loan can help you with a down payment, but you will still need to qualify for two mortgages and be able to make monthly payments on both if push comes to shove. However, most mortgages don’t require a payment for the first month so if you sell your home quickly, you can usually avoid double payments.

7. A bridge loan can cause stress. If your current home does not sell quickly, you will end up paying the mortgage on it, the mortgage on your new home, and the payment on your bridge loan. Make sure to carefully evaluate your finances to ensure that you can make your payments for a short time if you need to. You can also help eliminate financial stress by pricing your current home to sell quickly.

Once you have evaluated the pros and cons of an Texas bridge loan, contact the financial professionals at Level 4 Funding to get your application started!

The sooner you apply for your bridge loan, the sooner you can get cash in hand for your down payment. Don’t let your dream home slip away because you are waiting for your current home to sell. Find out the benefits of bridge loans today!