If you are involved in a “fix-and-flip” business or other aspect of real estate, there are various types of financing options that can be accessed to help secure a valuable property. One form of financing to consider is a “bridge loan.” This is a short-term loan that can be used for residential or commercial real estate purchases. The loan itself enables an individual to borrow against the equity within their own existing property in order to purchase a new piece of property. When the new property is purchased, the other property is sold and the proceeds from that sale will pay off the bridge loan.
Flexible Financing Option
One of the key benefits of a bridge loan is flexibility. This type of loan may be used in various ways to help complete an important financial transaction. It can, for example, be used “in reverse” by obtaining a bridge loan secured against the new property being purchased.
Be Cognizant of Loan to Value Ratios
If you are interested in obtaining a bridge loan, be cognizant of the fact that lenders typically provide a loan to value of up to 75 percent of the current value of your property. It is also important to keep in mind that if your current property has an existing mortgage, the lender will likely want to refinance the remaining balance on the mortgage and provide a new loan.
If you are looking for a bridge loan, applying with a traditional bank is not recommended. Why? Because many banks do not even offer bridge loans and opt to focus primarily on long-term loans. Hence, why bridge loan lenders are private lenders who are quite comfortable working with people in need of short-term financing.
Qualifying for Bridge Loan
In order to qualify for a bridge loan in Los Angeles, the borrower needs to have enough equity in their current property based upon the requested loan amount. In addition, the borrower needs to have enough cash on hand to cover the monthly mortgage payment while the bridge loan is outstanding.
Time Needed to Secure a Bridge Loan
The length of time needed to secure a bridge loan in Los Angeles depends on multiple factors. For example, if you are using the equity of an owner-occupied property for the loan, you should budget between two to three weeks for approval and funding of the loan. On the other hand, if the real estate used as collateral is an investment property transaction, the bridge loan could potentially be approved and funded within five days.
Looking for a Bridge Loan? Contact PB Financial Group Today
If you are looking to secure a bridge loan, contact the highly reputable hard money lenders PB Financial Group, leading private lender in Southern California. For further information or to schedule a consultation with one of our expert lenders please contact PB Financial Group at 877.700.3703 or visit www.CalHardMoney.com to learn more.
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