Bridge loan process?

7 Replies

What's the process like? Looking for advice from actual borrowers and lenders specifally Bridgeloan or similiar products. 

@Mary Ann Shlim Hi Mary! Through my career in real estate, I've been both the borrower for these types of loans, as well as the lender.

In regards to the process, it's actually a lot easier than trying to obtain a traditional mortgage. Since these loans are typically short term and higher interest, I'd recommend having an exit strategy in place (sell or refinance) when securing this type of financing. 

Here's how I would break down the process:

1) Discuss Your Situation w/ Lender (i.e. looking to purchase/rehab/sell property, cash out refi, or bridge a purchase that cannot go conventional)

2) Discover Lending Parameters (3 primary questions to ask)

- what is the range of interest rates (typically 7-13%)

- what are the origination fees and out of pocket expenses (typically 2-5%)

- how are LTV's calculated - is it based on purchase price or resale value (lenders are usually 65-75% of resale value) - also, some lenders have max LTV on purchase price, include/exclude rehab costs, so that's important to note as well

3) Get a Few Quotes

Most lenders can move quickly on closing (5-14 days), as this is primarily an asset based loan - meaning not many times will the lender request tax returns or income statements. 

I hope this sheds some light for you! Let me know if you have any other questions as we do provide this type of financing in Illinois.

The lender on a bridge loan will want something for security. Often the house the seller has a mortgage on it and the property the seller is buying has a mortgage on it. What will the lender use for security?

@kathie riedel we have a property free and clear looking to cash out to work on the next project. 

Its not a rental. Its a flip we finished. We dont qualify for traditional lending because of dti.

Originally posted by @Mary Ann Shlim :

Its not a rental. Its a flip we finished. We dont qualify for traditional lending because of dti.

Hey Mary, what is DTI? I came across this article also wondering about Bridge Loans. My case is more towards the future but just starting to research.

Alex Brant, Real Estate Agent in Indiana (#RB14035365)
317-721-6166

@Alex Brant Debt to income. They use a percentage for a traditional loan to see what amount you qualify for. 

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