I hope you are doing well, and I hope you are having a happy and healthy week so far. Did you hear that the Rams are in the Super Bowl? LOL!
I noticed that I have not written about Bridge Loans in quite a while, although most of you know what they are and what they do, but do you know everything they do? We will test your “Bridge Loan” knowledge, and if you pass the test, you will likely send all of your clients our way because it is the easier and smarter thing to do.
Bridge Loans are mainly used to get a buyer who has not yet sold their house to be able to access the equity in their departing residence without having to sell so that they can move up, out, down, or sideways. It is a tool to get you from home A to home A+, and they are prevalent now because home A will sell in a weekend, and buyers often don’t even need the Bridge Loan for which they applied. Below are some other things that you need to know about Bridge loans:
We will be able to finance the departing residence to approximately 80% of the appraised value less any other mortgages.
Fees are typically $3500.00 on a Bridge Loan, assuming your client is getting a takeout loan from us that is larger than the Bridge Loan. If they get their takeout financing elsewhere, we charge 2 points for the Bridge Loan.
Rates start at 4.99%, but most are at 5.99%, and the payment is generally interest only. We have capped the Bridge Loans to 6 months in this market, but we will go to 11 months in slower markets.
We can pre-fund a portion of the Bridge Loan early in a transaction so your client can give an earnest money deposit. We will do this even if your client is buying contingent, and we do this at no extra cost or no cost if there is no Bridge Loan involved.
Bridge Loans start at about $40,000.00 (we will go lower if needed), and there is no loan limit on these, assuming we have the funds available.
Then there is our mini Bridge or quickie private loans, and these are an excellent tool for your clients. These are still along the lines of a Bridge Loan, but for smaller amounts and not necessarily being used to purchase the new house, but it gets them to the point where they can sell and buy. Below are some of the advantages of a Mini Bridge Loan:
We will not need a full escrow and Title report as the money is not for the purchase.
We can loan a buyer 20-30-40-50K ish, assuming they have the proper equity
We can consolidate seller/buyers credit cards and improve their credit scores before they buy
Buyers can use the money to make home improvements
We can loan money to the buyer for their earnest money deposit
Mini Bridge loans are an excellent tool as we have many clients who want to fix their place up and then sell. We will loan them the money after signing the listing agreement with the agent who referred them. This way, we know they will get started on making the improvements to their credit or house, and we like to push them along, so this happens in 30-60 days, so we get them moving. The goal is to put clients in a better position to buy vs. where they are now.
Here is something else that I think is very important. When is the payment due? So let’s say our offer is accepted next weekend, and we open escrow on February 7. We would close on March 9, and the first payment on the new house will be due May 1, and it would not be late until May 16. So if you price their sale house correctly, they will sell and close long before May 1! I think this is another incentive for you as an agent to push a Bridge loan because it takes greed out of the list price.
Please let me know if you have any questions about this.
Interest rates have been on a rocky road the past couple of days. It makes me think of ice cream, but what doesn’t. Interest rates are still in the beautiful range, and please let your clients know that in the past 50 years, interest rates have spent 12 months under 3%, 16 months between 3%-3.5%, 55 months between 3.5-3.99%, and 517 months over 4%.
30-year Government Loans (FHA / VA) are in the low 3’s
Conventional Loans up to $647,200.00 – mid to high 3’s
High Balance Loans $647,201.00-$ 970,800.00 are in the mid to high 3’s and low 4’s.
Jumbo loans above $970,801 are in the high 3’s. We can do low 4’s with as little as 10% down. We can do 1-year findings on these too!
5/1, 7/1, 10/1 Arms are in the high 2’s and low 3’s!
Bank statement loans – They are available with 10% down again! low 4’s to low 5’s depending on down and credit score.
Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the mid 4’s.
0 down loans are in the low 4’s – 620 credit score min right now! Mid 3’s for the most part up to $670,000.00 Price.
0 down Jumbo to 1.2 Mil – 700 credit score – call for a quote
Private Money lenders – hard Money Loans – 35% down!
No Ratio Loans 30% down
Debt Service Coverage loans with as little as 25% down
Bridge Loans – are typically 4.99 – 5.99% with limited fees – But they get you where you need to go!
Interest rates are subject to change without notice! Above are LA County Loan Limits.
I will be around all weekend, and I hope to hear from you! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!