Unlike typical purchase loans (otherwise known as fixed-rate mortgages) — which are relatively standard, straight forward to qualify for, and reasonably easy to mitigate risk on — bridge loans carry a bit more risk to both the borrower and the lender. Buyers that wish to take on new debt before offloading a significant asset, in most cases, spooks most lenders and is not an ideal situation.
As a result, to qualify, buy before you sell loans require:
- At least 20 percent equity in your existing home. We must see you’ll be in a stable financial situation whenever you finally sell your house.
- Ability to afford multiple loan payments. We do due diligence to ensure you’ll be able to make two mortgage payments at once since you’d still be paying off your old home while taking on new financing. Cash reserves and proof of income are the keys to success here.
- A thorough assessment of the housing market. While nothing is guaranteed, a strong housing market gives lenders peace of mind and assurance that you’ll be able to take out equity from the transaction once you sell your house.
- Great-to-excellent credit. It’s important to lenders to see that you’ve successfully managed the challenges of paying off debts in the past. Credit bureaus look for various factors in your credit history, but assuming you make timely payments and aren’t over-leveraged, your credit score should enable you to qualify.
Able to afford multiple loan payments at once? Get in touch with our team today to see how we can help secure a bridge loan for your new home purchase in Arizona and the Arizona area.