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What Is a Bridge Loan – And How Is It Beneficial?

Real estate agents, investors, home buyers and home sellers are always interested in utilizing smart home buying strategies.

A bridge loan is a type of creative financing that falls into the category of “smart home buying strategies”.  It is a short term loan, 12 to 18 months only.  It gets paid off with longer-term financing sometime in the near future,  or from the sale of the property.  As the name implies,  it  provides a bridge from one transaction to the next.

The Benefits:

#1. A Bridge loan is sometimes considered a cash purchase by Listing Agents.

#2. The Buyer does not need a contingency clause in the purchase offer of their new    home.

#3.  A home owner can buy a new house now and sell their present home later.

#4. There is no fear of losing their dream home because they have not sold their present home.

#5. Your buyer can buy a fixer, renovate it and have their dream home.  Hard money bridge loans are often the solution for less than perfect properties.

#6. Speed.  These loans can usually close in less than a week.

The Requirements:

  • It must be a 12 month loan.
  • There will be 3 months of guaranteed interest minimally.
  • 20% down payment required on a purchase.
  • On a refinance there must be lendable equity.

 

The Uses:

Typically, bridge loans are sought when another sale is pending and the funds are needed to close the final deal.   At other times,  a buyer may be in a “fire sale” situation,  where the seller on the other end of the transaction must close a deal within a specified period of time.

Some instances when you might use a Bridge Loan are:

  • Pulling some cash out of the equity in your current home to secure a down payment to purchase another home. This allows you more time to sell your present home.
  • Refinancing the property you are selling to pay cash for the new home.

 

The Costs:

Rates and costs for Bridge Loans can vary by Lender.   Rates range between *9-12% and are usually interest only.  Rates depend on the amount of the down payment so the bigger the down, the lower the interest rate.

How We Can Help You:

We are licensed for the state of California and have been in business for 29 years.

Call our office at 707-523-2099 and within just a few minutes, we can let you know what we can do for you!

 

We hope this has helped you understand more about what a Bridge loan is and how we can be of assistance.

Don’t Let The Doom & Gloom of The Weather Get You Down

Let the Superheroes of “Not-Normal” loans raise  your spirits and increase your success rate!  We think outside the box to help you get those less than perfect real estate deals done.

In today’s competitive market, one needs to be creative .  Home buyers need stronger offers and home sellers need more options.  The Superheroes of Sun Pacific Mortgage are here to provide you with the hard money loans your clients are seeking so everyone comes out a winner.

In 2016 Superhero Forest and Superhero Ken funded 235 Hard Money loans, both purchases and refinances, averaging 20 days to funding.  These loans included a mix of owner occupied residences, rental/investment properties, Bridge and Temporary loans, as well as land and small commercial loans.

We hope our “Not-so-Normal” loan programs can help you achieve your clients’ goals of home ownership or investment growth.  We have only two main qualifications for these loans:

#1. Decent existing equity or at least 20% down payment and
#2. An ability to repay the loan (source of income).

Call Us Today at 707-523-2099 or email us back with your scenarios and we’ll let you know how we can help!

How Strict Has Mortgage Lending Become?

There is a general belief today that lending requirements have become so restrictive that many lower-credit borrowers are dropping out of the mortgage market.

The Home Mortgage Disclosure Act data discloses that 33% of all applicants in 2015 were in the lower-credit category compared to 62% in 2006 and 50% in 2000 – when the market was judged to be balanced.

The decline in lower-credit applicants is clearly problematic and a symptom of an overly-tight mortgage market.  Are would-be applicants holding back because they are afraid they might not qualify? Or for some other reason, such as the condition of the property?    

A hard money loan might be the answer for those who have less than stellar credit and would not qualify for a conventional loan.  This option can provide an avenue to enter the real estate market when it appears that all hope has been lost.  

Here at Sun Pacific Mortgage make it our goal to find a way to make home ownership possible when chances look slim to none.  Don’t give up on your dream of home ownership.  Please call us at 707-523-2099 and see how we can help you with a hard money loan.

Bridging The Gap For Sellers To Become Happy Home Buyers

Lack of inventory has real estate a bit muddled at the moment.  However, with bridge loans and short term loans, real estate activity can be increased and benefit those Home Owners who do want to sell.

● This type of financing removes the stress of having to get into contract on a new home before one sells their current house.

● Purchase offers can be extra strong as the financing required to buy a new home is available, no longer requiring a contingency of one’s current house to be sold.

In 2016 our company funded 235 Hard Money loans. It was a good mix of owner occupied loans, rental property loans, Bridge loans, Temporary Loans, small Commercial Loans and Land Loans. We took an average of 20 days to fund a loan, with our fastest funding in 3 days! January 2017 marked the 29th Anniversary of our family company doing home loans.

We continue to stand ready to help you, a client or someone you know bridge the gap between a current home and a new future home with our alternative finance programs.  Call us today at 707-523-2099!

Best, Forest & Ken – The Guys in the White Hats

Recently Funded Bridge and Temporary Loans – Done to fill the gap:

Petaluma, California (Sonoma County)
Loan Amount:$660,000
Days To Fund: 7 days
Loan To Value: 75%
Why Turned Down Elsewhere: Needed a fast loan for a purchase.

San Francisco, California (San Francisco County)
Loan Amount:$420,000
Days To Fund: 11 days
Loan To Value: 72%
Why Turned Down Elsewhere: Needed a fast, short term loan.

Bolinas, California (Marin County)
Loan Amount:$490,000
Days To Fund: 17 days
Loan To Value: 64%
Why Turned Down Elsewhere: Had a bankruptcy

Pioneer, California (Amador County)
Loan Amount:$1.5 mil
Days To Fund: 20 days
Loan To Value: 50%
Why Turned Down Elsewhere: FICO score not good enough.

Cloverdale, California (Sonoma County)
Loan Amount:$235,000
Days To Fund: 14 days
Loan To Value: 63%
Why Turned Down Elsewhere: Property condition was poor.

Useful Investment and Real Estate Apps & Websites

The internet has spawned several helpful apps for anyone involved in the real estate world.  I found some to be especially helpful, both in locating and in evaluating possible investment properties.  Below are some of the more notable ones:

  1. Bigger Pockets

This app contains searchable forums where most every question that you can think of has been answered regarding real estate investing.  It is also a great place to meet other investors in your area.

  1. Zillow; Realtor.com; Trulia; Redfin

Zillow, Realtor.com, Trulia and Redfin are great sources to see what properties are for sale or sold in a particular geographical area so that you can better determine the value of a potential investment.

  1. Hammer Point

With this app you can estimate the entire cost of your remodel or repair before  spending your first dime.  A very valuable tool which will help you with the various aspects of your project.

  1. Homesnap

This is an invaluable tool.  With this app you can take a picture of a property and it will give you the address, estimated value, local demographics and more.  Simply take a picture and drive on.   All the details are in your phone for later download.

I hope these resources will prove helpful in better time management and productivity as you pursue your investment goals for 2017.

Why Invest in Real Estate?

The fallout from the recession left some investors less likely to look to the real estate sector as an option for wealth growth.  However, we have witnessed a radical change in the economy and as a result, real estate has once again regained its rightful place as a solid investment in today’s financial world.

Unlike stocks and bonds, real estate is founded on brick and mortar.  A major advantage of real estate investments is the significant portion of return, which accrues either from rental income or appreciation over the long term.

Additionally, investing in real estate has a lower risk factor than other major asset classes.  This allows the investor to lower his/her portfolio volatility.  Financial consultants always advise diversification for their clients.

We have seen that as the economy has grown, the demand for real estate has driven the rents higher and higher, allowing for unprecedented growth in individual capital.

Of course, one of the major drawbacks of real estate investing is the lack of liquidity.  While you might be able to cash in stock overnight for immediate funds,  a real estate transaction can take months even with a competent agent.   Overall, as long as you have built flexibility into your portfolio,  you can be comfortable with some portion of it being illiquid, but producing capital appreciation.

For the past 29 years Sun Pacific Mortgage and Real Estate has provided many investors with the opportunity to invest in Notes.  We regularly have trust deeds available, for property investments throughout California.

If interested in earning 9-12% return, we look forward to working with you.   Please call 707-523-2099 for information on becoming an investor through us.

Jump Start Your Real Estate Project With Hard Money Loan

If you need funds to purchase a property to rehab, buy more investment properties, or buy your own home, hard money lending may be the solution for you.

Hard money lenders primarily look at assets instead of credit scores.  In most cases, if you have at least 35% to put as a down payment or use from existing equity, they will provide you with the capital to bridge the gap in a short amount of time.  Even though hard money carries a higher interest rate than conventional loans, they can offer the springboard you need to jump into the real estate investment world.

Other benefits of hard money lending include:

Quick Approval.   It is possible to get a loan funded in a matter of days as opposed to months.  It some cases this can be a make or break factor.  

Easier Qualification.  Credit scores are not the stumbling block they can be with conventional lending.  You are more than a number with private lenders.

Hard Money Same as Cash.  Many sellers are persuaded to accept an offer that is based on hard money, because It is considered a cash offer, over a traditional loan.
We are here to help you get started in California, so call us with any questions or investment scenarios at 707-523-2099.

Super-Fast Loan Done For Broker

Property Refinance in Santa Clara, California

I work with many loan Brokers and Realtors.  One of my Broker buddies called with a transaction he needed to get done for a borrower on a rental property refinance. The clients needed a $770,000 first mortgage at 10% interest only for 2 years – and it was needed quick as they had to close escrow on a new purchase of a multifamily property.

This Broker is a true professional.  He already spoke with the clients and had all of the documentation he knew was required for loan approval, which he then sent me.

The phone call to me on January 3rd and by January 22 all transactions were completed – the refinance and the new multifamily purchase. Touchdown!

Hard Money loans are like magic.  They have speed and flexibility.  In this type of market, with multiple offers, borrowers can benefit from hard money as it fulfills a tremendous purpose in real estate buying these days.

Northern California’s Bay Area 2016 Year End Review

These statistics and information suggest that it is the right time to invest in real estate, before the inevitable increases that historically occur in the Spring.

Pacific Union’s Economist, Selma Hepp, recently published the following data regarding the real estate market in the Bay Area:

  • The December home sales decline in the Bay Area was larger than historically seen between November and December.
  • Activity among higher-end homes picked up in December, especially in San Francisco and Silicon Valley, where that price point struggled earlier in the year.
  • The decline was led by slower activity among homes priced below $1 million, which is a function of higher mortgage rates, but also a severely depleted inventory of affordable homes for sale.
  • December inventory levels fell by double the rate from November than seen since 2008. There were 4 percent fewer home sales in 2016 than in 2015, with a larger decline in Marin and Alameda counties.
  • Among the eight Bay Area counties — excluding Solano — only Napa County home sales activity finished 2016 on a stronger note than last year.

 

The strongest 2016 appreciation was recorded in Sonoma, Alameda, and Contra Costa counties.  December buyers remained enthusiastic in Napa and Sonoma counties, while San Francisco and Silicon Valley continued to see relatively fewer buyers willing to engage in bidding wars.

Overall, however, home sales in all of 2016 were only about 4 percent lower than in 2015. Marin County saw the largest decline, with a 7 percent drop in sales, followed by a 5 percent decline in Alameda County. The other Bay Area counties saw 3 percent to 4 percent declines in sales.

We are here to help you take advantage of the real estate market before prices increase, with alternative financing lending, also known as Hard Money.  If you are turned down elsewhere or need a fast loan, call us.  We can answer your questions at 707-523-2099. 

Pacific Union Bay Area Real Estate Blog: http://blog.pacificunion.com/election-outcome-and-rising-mortgage-rates-temporarily-halt-bay-area-sales/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+pacunionblog+%28Pacific+Union+Blog%29

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