A bridge loan lender could be the best solution for fast financing, as the correct lender can quickly get you the money you need to secure your next real estate investment. That said, bridge loan lenders come with certain risks, so knowing how to choose the right one for your needs is essential.
Not sure where to start? Keep reading to learn how to choose a bridge loan lender in Southern California who will work for your goals. Here are ten questions you must ask a bridge loan lender when applying for a loan.
Table of Contents
- Top Ten Questions to Ask Your Bridge Loan Broker:
- 1. What Is A Bridge Loan?
- 2. Are You Familiar With Your Market?
- 3. How Long Does A Bridge Loan Typically Take To Close?
- 4. What Is The Limit To The Size Of The Bridge Loans They Can Offer?
- 5. What Is My Bridge Loan Rate?
- 6. What Is The Bridge Loan Application Process?
- 7. What Are The Terms Of The Loan?
- 8. How Much Insurance Do I Need To Get A Loan?
- 9. Do You Offer Alternatives To Bridge Loans?
- 10. What Are Your Qualifications, And Are You Licensed?
- RTI Bridge Loans – Best Hard Money Loans in Southern California
Questions to Ask Your Bridge Loan Broker:
What Is A Bridge Loan?
A bridge loan is a short-term loan that provides a reliable source of funding until you can secure permanent financing or pay an existing obligation. Often, investors use bridge loans to finance the purchase of a new piece of property while waiting for another piece of property to sell.
Also Read: Is A Bridge Loan The Right Fit For You?
Are You Familiar With Your Market?
If you are a real estate investor looking for a bridge loan lender, you should start by talking to potential lenders to see where they can provide funding. Typically, it’s best to go with a local bridge loan lender, as local lenders know the unique market conditions that can affect housing markets in Southern California and beyond. They might also see value where larger nationwide lenders may not.
How Long Does A Bridge Loan Typically Take To Close?
When looking for bridge loans for investment property, double-check how quickly a bridge lender can provide you with the cash. Asset-based lenders usually have a general rule of thumb for most loan scenarios. However, you must confirm if your application will require more or less processing work. For example, closing a loan for a condo purchase may require less time than a commercial office space.
What Is The Limit To The Size Of The Bridge Loans They Can Offer?
The answer to this question varies significantly based on the hard money lender you are speaking with. Every lender will set the amount you can borrow around several different factors. These might include:
- The “Loan to Value” (LTV) of the property
- The “Loan to Cost” (LTC) of the property
- The “After Repair Value” (ARV) of the project
- Minimum and maximum loan sizes
- History of borrowing
Our loan programs at RTI Bridge Loans start from under $250k and go up to over $25 million.
What Is My Bridge Loan Rate?
While the figure ranges from one lender to another, bridge loans typically have interest rates between 6% and 10.5%, which makes them more expensive than traditional, long-term financing options. However, these loans are designed to be paid off quickly so you don’t accrue large amounts of interest.
To get the best bridge loan rates, here’s what you need to do:
- Boost your credit score
- Improve your debt-to-income ratio
- Build up your assets
- Earn more income
- Put more money down
What Is The Bridge Loan Application Process?
Here are the three steps to processing a bridge loan with RTI Bridge Loans:
When potential borrowers apply for the pre-approval process at RTI Bridge Loans, they go through a series of steps to ensure they receive the financing that best aligns with their investment needs. After confirming that the project fits our lending criteria, we assess their credit, financial background, and previous experience. For the process to go smoother, prospective borrowers should come prepared with documentation of their project needs and location, acquisition price, and proof of funds.
» Processing and Underwriting
If the application meets our underwriting criteria, we schedule an appraiser to inspect the property. We might ask for additional documentation relating to the borrower’s cash availability, experience, and credit. This being an asset-based loan, there is no need to show income documentation.
After approving the prospective borrower’s application and documents, we quickly move on to the closing and funding process, where borrowers are expected to sign several documents including; a mortgage, personal guarantee, investment affidavit, security agreement, and assignment of rents and leases. We’ll disburse funds once we complete everything to the satisfaction of the underwriter and the closing agent.
What Are The Terms Of The Loan?
Bridge loans typically have shorter terms than traditional loans. For instance, most bridge loans are usually offered for 12 months. However, based on the customer profile, a lender may extend these terms to two years.
How Much Insurance Do I Need To Get A Loan?
When applying for a bridge loan, you’ll need to use a physical asset, such as a home or property, as collateral to borrow money in case you can’t repay your loan. Remember that you must have at least 20% equity in that home.
Do You Offer Alternatives To Bridge Loans?
It’s always a good idea to ask your bridge loan lender if they have any alternatives to a bridge loan. Some of our alternatives to bridge loans at RTI Bridge Loans include the following: Hard money loans, fix and flip loans, and private money loans.
What Are Your Qualifications, And Are You Licensed?
One of the most important questions to ask your bridge loan lender is whether they are qualified and licensed for the local real estate area. Don’t settle for dark alley transactions. Instead, ensure any bridge loan lender you consider is licensed within California’s housing and real estate markets or departments.
Anyone can claim they are a bridge loan lender, but only those with the proper licenses or records can prove it. Working with a qualified and licensed lender is beneficial since they know what they’re doing.
RTI Bridge Loans – Best Hard Money Loans in Southern California
Ready to get started on your new bridging loan? RTI Bridge Loans is a leading bridge loan lender offering short-term loans to real estate investors in Los Angeles, San Diego, Santa Barbara, and surrounding Southern California areas.
At RTI Bridge Loans, we’re committed to your success and are prepared to help you get ahead of the competition in the Southern California real estate market. For the best bridge loan rates, contact RTI Bridge Loans at (562) 857-2285 for more information on how to apply.