Bridge Loans

Direct California Real Estate Bridge Loan Lenders

RTI Bridge Loans is a Direct Bridge Loan Lender in California serving Los Angeles County as well as Orange County, providing real estate investors and homeowners with Commercial and Residential Bridge Loans. We offer fast approvals and funding for real estate endeavors, competitive rates and reliable service for Direct Bridge Loan Financing. A hard money bridge loan can be a valuable and viable option. In many situations, bridge financing can be funded within days for investment property against the existing equity within real estate.

You don’t have to wait to sell your existing property to purchase a new one – bridge loans allow you to buy your new property while you wait to sell your existing property. Let’s find out more about bridge loans, how they work, pros and cons, and if they are right for your situation.

30 Years Of Experience
30 Years Of Experience

Partner with one of the most reliable and professional direct hard money lenders in California with over 30 years of hard money lending experience.

Fast Approvals And Funding
Fast Approvals And Funding

Quick approvals and direct funding when time is off the essence and need capital on critical opportunities in this fast-moving real estate market.

Leverage Your Money
Leverage Your Money

Maximize Leverage with our financing up to 70-80% LTV of the residential, commercial or mixed project at competitive hard money loan rates.

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We Fund California Real Estate Projects

RTI Bridge Loans, one of the most experienced direct hard money lenders in California serving Los Angeles and Orange County. We fund hard money loans to Real Estate Developers and Investors, regardless of the size or a challenge of the project, ranging from Bridge Loans, fix and flips to Private money Loans and commercial acquisitions. We provide quick approval and funding with competitive rates and reliable service through asset-based lending for various real estate projects and transactions.

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What is a Bridge Loan?

Bridge loans are short-term mortgages you can utilize to access the equity in a property that you’re selling – simply put. Doing this helps you purchase a new property, and they are most commonly used in housing markets that are tight and packed with bidding wars as well as competitive purchase offers.

Bridge loans provide short-term funding to cover a gap between one loan and another when you don’t have capital.

How Do Bridge Loans Work?

They work in two different ways – both can be beneficial to you. They can be used as a first mortgage to pay off a current loan and fund a down payment on your new property, or as a second mortgage with down payment money applied. For your first mortgage Bridge Loan, a large loan is taken out, up to 80% of your equity’s value. The funds, initially, are used to pay off your current mortgage balance. The money that’s left over is used to pay a down payment on your new property.

The second mortgage bridge loan option involved borrowing the difference of your loan’s current balance as well as up to 80% of your property value. Your current mortgage loan is left alone, and bridge funds from your second mortgage are used as the down payment for your new property.

An Example Of How Bridge Loans Work

A traditional bridge loan is helpful if you are an investor or a homeowner who owns a property already and is looking to buy a new property. The property owner does not have enough money for a down payment or an all-cash offer to buy the new property, but they do have enough equity in their existing property to finance a bridge loan. Borrowing against their equity will enable the owner to purchase the new property. When the property is purchased, the owner can move into it then sell the old property, which will pay off the bridge loan. Just how it sounds, bridge loans “bridge the gap” between purchasing a new property and selling the old one.

Let’s say your current home is worth $350,000, and you have an outstanding $200,000 loan balance (assuming you receive 80% of your current home’s value). For the first mortgage bridge loan option, you’d have a maximum loan amount of $280,000 – $80,000 for a down payment on your new home and $200,000 to pay off your current loan. For the second mortgage option, you’d have a maximum loan amount of $80,000 that would all go towards the down payment of your new home. For more information, contact a bridge loan lender for accurate information to your own personal situation.

Different Types Of Bridge Loans

The types of Bridge Loans we are going to talk about our residential bridge loans, commercial bridge loans, and bridge loans for seniors. Read on to learn more about these loan types and if they will be beneficial to your situation.

Residential Bridge Loans

This is the most popular route for real estate investors as well as homeowners to purchase a new home before selling their other home. It enables people to borrow against the current residential property in order to buy a new property. When you don’t have the necessary liquid funds for a down payment on a new home, bridge loans reduce that hassle and stress by enabling you to pull equity from the current home to use as a down payment for the new home. When the old property is sold, the residential bridge loan will be paid off.

Retiree And Senior Bridge Loans

Bridge loans might be the only option for seniors and retirees who don’t have enough income to qualify for a traditional home loan. With bridge loans, seniors have the ability to borrow against their current home equity to purchase a new home, minus providing proof of income and being approved on their debt to income ratio. When the old house sells, that serves as the payment of the bridge loan.

Commercial Bridge Loans

Commercial mortgage bridge loans are available to commercial property owners who want to borrow against existing real estate in order to afford a down payment or purchase a new commercial property. These short-term loans for commercial real estate help the real estate owner when they do not have enough liquidity but a lot of equity to borrow against. When the old commercial property is sold, the bridge loan is paid off. Commercial loans are slightly more complex than residential bridge loans as bridge loan lenders will require extra documentation and info in order to process that loan. Due to this, commercial bridge loans usually have a lower loan to value ratio (LTV).

Pros and Cons Of Bridge Loans

Pros:

  • You can tap into equity when your property is still for sale. This will enable you to buy a new home while your old one is still for sale.
  • They allow you to move when your existing property is in the selling process rather than having to be stuck finding a temporary place to live while waiting for the sale to go through.
  • You can use bridge loans as a second mortgage to buy your new property by borrowing equity that you have on your current home.
  • You don’t have to wait to sell your existing property in order to buy a new one. Your offer will be more competitive in tight housing markets as well.
  • You can make interest-only payments until your house is sold. Many bridge loan lenders offer programs that are interest-only, which means only the interest charges are what you pay each month. Though the interest rate may be a little higher, it will soften the financial impact of having two monthly mortgage payments.
  • You might be able to pay your entire mortgage with a bridge loan and get extra cash! Your extra cash can be used as a larger down payment on your new property.

Cons:

  • You need substantial equity in order to qualify. If you don’t have a solid chunk of equity in your real estate, bridge loans are simply not a viable option.
  • You’ll be making 2-3 mortgage payments. When you borrow against your equity then proceed to buy a new home, you’ll potentially be carrying around 2-3 mortgage payments, which can easily become overbearing.
  • Interest rates and closing costs are higher. When it comes to short-term lending options, bridge loans will have higher closing costs and interest rates because you are borrowing for a short amount of time – bridge loan lenders have to make their money too.
  • They aren’t as regulated as traditional mortgages meaning you’ll have less protection. Regulatory reform rules don’t apply to temporary bridge loans, which have terms of only 12 months or less.

Requirements To Qualify For A Bridge Loan

Bridge loans are not approved in the same ways that regular mortgages are. Bridge loan lenders require you to jump through a few different hoops in order to meet requirements – fees and rates also depend on your property type. First things first, be sure you have enough money to cover 2-3 mortgage payments.

Private investors usually set their own bridge loan lending guidelines, and many won’t count your current mortgage against you. This is because they are lending you the money, knowing you will be paying it off quickly. Some bridge loan lenders may require you to qualify with both loans, which means you won’t be able to tap into your full equity amount unless you have a solid income.

Second, you should have at least 20% of the equity in your current property – this is how bridge loans work the best. The bare minimum requirement will be 20%, and if you don’t have that, you probably will not qualify.

Lastly, you absolutely need to be committed to paying the loan off quickly – we are talking within 6-12 months. You will need to have an appraisal on your current property, and your bridge loan options will be lowered if your appraisal comes back lower than expected. All in all, bridge loan lenders will scrutinize your property on the market more than the home you want to buy in order to ensure it is priced to meet the bridge loan’s term period.

Always contact a professional bridge loan lender like the experts at RTI Bridge Loans in Los Angeles and Orange County to understand more about requirements for your specific situation. Everyone has situations that are unique, and you will understand more information if you speak with a pro.

Common Bridge Loan Rates

Closing costs for bridge loans usually range from 1.5%-3% of the loan amount. Rates can be pretty high, usually around 8%-10% depending on how much you are borrowing as well as your credit profile. Steer clear of bridge loan lenders that ask for an upfront deposit in order to approve your loan – they are most likely not a legitimate lending source. Contact the pros at RTI Bridge Loans to discover your loan rate.

What Is A Loan To Value Ratio (LTV)?

It’s important to understand what an LTV is before taking out a bridge loan. Bridge loan lenders typically have a lower loan to value ratio than traditional mortgages taken out of banks. Bridge loan lenders generally allow an LTV ratio of 70%-75%. Residential bridge loans can be a small amount of only $20,000 to a massive loan in the millions.

Final Thoughts – RTI Bridge Loans

Using a bridge loan is a great idea for people who are set on money and have enough to pay multiple mortgages at the same time. They are also great for people who are moving and buying a new property but have yet to sell their existing one.

RTI Bridge Loans is a highly experienced bridge loan lender in California, serving Los Angeles County as well as Orange County. It’s crucial to know and trust your bridge loan lender and find one who wants to work with you and gives you reliable service. Contact RTI Bridge Loans today to learn more about how a bridge loan will benefit you.