Bridge Loans Consumer

No Upfront Deposit Or Fees– No Prepayment Penalties
Over $250,000,000 funded

Problem: You own a home with good equity and want to buy another home, but you have no additional cash, poor credit or income that cannot be documented.

Solution: Louie Loans can offer up to 100% financing, or more, on the purchase with a loan secured by both homes, depending on total equity.

Result: You can close escrow on your dream home within the current low inventory environment

Many times a consumer will find the home of their dreams unexpectedly before they have time to sell their current home to access the needed down payment. A bridge loan allows a buyer to close on the purchase of a new residence without having to make a contingent offer. The currently owned home will not close until after the close of the new residence. A bridge loan allows the buyer to access the equity of their current home and use it towards the down payment on the new residence. The expectation is that the current home will be sold within a short time frame providing the funds for the bridge loan to be repaid.

This allows the buyer to sell their departing residence with sufficient market time to avoid having to fire sale the property.

BENEFITS OF THE BRIDGE LOAN:

• Close in 10 days or less
• Potential for a zero down payment
• Potential discount in the purchase price for a fast close
• Access the equity in their current residence for the down payment on the new home
• Allows sufficient time to sell departing residence to obtain the true market value
• Comparable to an all-cash over from the seller’s perspective
• Actually secure a desirable property in the current low inventory environment
• Close when a regular conventional loan has been declined or taking too much time
• Long-term financing can be secured at a later date

Many consumers and agents can be leery of the costs associated with a bridge loan however when taking a closer look at the details it can make financial sense.

Here are the numbers based on a $500,000 purchase price with a $450,000 loan amount:

• Potential 1% discount (could be more) in the purchase price for a 10 day close with a bridge loan = $5000
• Potential 1% increase in the sale of their departing residence as the bridge loan allows sufficient market time. $4000 assuming a $400,000 sales price

Loan Fees $8500 (points)

Difference in interest rate from a 9.50% and 4.50% (rate on a regular conventional loan is $1875 per month.

Loan costs on a regular conventional loan = $2000

Assuming 4 months market time to sell their current home and obtain a regular conventional loan = $7500

• $14,000 is the total cost differential of a 4 month hold time for the bridge loan vs. a conventional loan
• $9,000 potential savings from using a bridge loan
• $5000 total cost of a bridge loan

The total cost is also a write-off and the potential savings could be much greater as the numbers illustrated are very conservative. Many times a seller will accept a 10 day close, non-contingent bridge loan offer at a 5% lower price than an offer with a typical 30 day close using a traditional loan.