What is a Bridge Loan? | Stratton Equities
 
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WHAT IS A
BRIDGE LOAN?

Bridge Loans for Real Estate Investors

If you're looking to invest in real estate and are coming to a private money lender, like Stratton Equites - a bridge loan provides short term financing with less guidelines and faster closing times.

What is a Bridge Loan?

A bridge loan is defined as a short-term (12-24 months) real estate loan that closes faster than term loans or conventional loans. It's great for Real Estate Investors because not only does it close quickly, but the guidelines are more lax, therefore there is less underwriting and documentation needed..

Real Estate Bridge loans are temporary loans, secured by the asset (real estate), the typical property bridge loan has a term of 12-24 months, although many bridge loan lenders will grant the owner the option to extend his loan for six months to one year.

Few lenders do Bridge Loans, however at Stratton Equities we have broken the status quo of conventional mortgages by providing this loan to Nationwide Real Estate Investors.

Like a typical Bridge Loan, which is a short term loan, the same structure and outline can be utilized on Commercial properties in a Commercial Bridge Loan. This type of loan can also be a valuable tool for purchase or refinance of office buildings, retail property, and multifamily housing including apartment complexes. 

What is a Hard Money Bridge Loan?

​A Hard Money Bridge Loan is simply a short-term loan secured by real estate. These type of loans are a form of asset based lending for real estate investors - where private money lenders are primarily concerned with the property’s value rather than the borrower’s credit scores or what’s in the borrower’s bank account.

 

Whether it's a commercial real estate loan or a residential real estate loan, Hard Money Bridge Loans bridge the gap between those who do not have the ability to go to the bank due to poor credit and their dream of become a real estate entrepreneur. Where the banks say “No”, the hard money and private lenders like Stratton Equities can still say “Yes”.

Why Should You Use a Bridge Loan?

  • It's Straightforward & Easy : This type of loan has short-term financing (12-24 months) for real estate investors, who prefer to finance the purchase and/or rehab of their investment property, with a Fix and Flip loan (also a Bridge Loan) or a Cash Out Refinance loan... rather than buy fully in cash.

  • Quick Access to Funds: With conventional loans, there are qualifications that restrict you from getting access to those funds. With a Bridge Loan there are less guidelines, underwriting, and restrictions that will provide you with quick access to funds.

  • For Every Type of Real Estate Investor: A Bridge Loan is a great solution for any real estate investor - at all experience levels.

  • Options for all types of Properties: At Stratton Equities we have Bridge Loans that are tailored to  your investment needs. Here are some of our Bridge Loan options for Real Estate Investors; Fix and Flip, Cash Out Refinance, or Purchase Money.

BRIDGE Loan Summary

  • Investment Properties Only: Single-Family, Condos, Townhomes, Multi-Family, Commercial, Mixed Use, Office, Retail, Industrial, Warehouse

  • Rates Starting at 7.25%

  • $100K – $5M

  • Up to 75% LTV

  • Blanket Loan Options Available

  • Fixed rates/Adjustable

  • 9-24 Month Terms

  • Interest Only Payments

  • Purchase, Refinance, or Cash Out

  • Foreign Nationals Eligible

  • No Prepayment Penalty Option Available

Why Should Brokers Work with an Asset Based Lender for a Bridge Loan?

Working with an Asset Based Lender on a Bridge Loan provides Brokers with more mortgage options to offer all real estate investors a loan option to suit their unique circumstances and cash flow.

Since Asset Based lenders base loan qualification on the value or potential value of a property, real estate investors who may have trouble qualifying for a traditional mortgage are ideal candidates for a Bridge Loan.

What is an Asset Based Lender?

A Traditional Mortgage lender, like a bank, relies on proof of employment, tax documentation, and credit score. 

An Asset Based lender bases loan approval on the value or potential for value of a property, making this ideal for real estate investors who might be self-employed, have poor credit, or other circumstances which make traditional mortgage approval difficult. Approval is based on the Loan-to-Value Ratio (LTV), which compares the loan amount to the value of the property.

Why Should You Work with an Asset Based Lender?

As a broker, working with an Asset Based lender enables you to provide more types of borrowers with private money loans that fit their unique loan scenarios. Rather than simply assisting those real estate investors who are eligible for a traditional mortgage, you can also help investors who are interested in purchasing property that cannot be approved for a traditional loan. Not only does working with an Asset Based lender widen your client base, but also improves their satisfaction because they know you can help them get approved for a loan, no matter their situation.

 

How Can I Get Started Working with an Asset Based Lender Today?

Getting in touch with Stratton Equities to discuss working together to provide loan options is a fast and easy process! We are excited to speak with you and discuss mutually beneficial options.

Contact Stratton Equities to figure out the best working relationship for you and your business! One of our top loan officers will be in contact with you within 24 hours!

If you have an investment property and wish to speak with one of our Loan Officers, call Stratton Equities at 800-962-6613, email us at info@strattonequities.com, or apply for loan pre-qualification today!

  

Why Should Real Estate Investors Work with Asset Based Lending? 

 

Stratton Equities is the leading hard money and NON-QM mortgage lender for real estate investors in the United States. With the largest library of NON-QM mortgage loan programs under one roof, we here at Stratton Equities pride ourselves on tailoring the perfect real estate mortgage loan options for each individual borrower’s needs nationwide.

 

We also understand how important your time is - as opposed to banks who broker your loan application out to other banks to waste time, our loan officers can get back to you with your pre-approval for a loan within 24 hours.

 

As an asset based lender, Stratton Equities and our team of expert loan officers will help guide you through our expedited loan approval process, finishing weeks before our traditional competitors. No Junk Fees! No Upfront Fees! No Tax Returns!

 

At Stratton Equities, we work directly with real estate entrepreneurs and help them fulfill their real estate entrepreneurial goals. Whether you’re an experienced borrower or a first time investor, we understand how daunting and complicated it must be to try to enter this competitive field. But don’t worry! All we really ask of our clients is determination and commitment to their projects. No expertise needed. Welcome to your one-stop shop for all your real estate investment loan needs!

Bridge Loan Lenders for Beginners

First time real estate investors struggle with other sources of financing such as traditional mortgages or a line of credit and don't know where to start to obtain funding for their investment property. This is why first time buyers and experienced investors choose to work with bridge loans, because this type of program is an asset-based loan. The financing is based on the Loan to Value (LTV) of the Asset versus the borrowers credit scores, employment history, and other documentation.

 

Unlike other private loans, an asset based bridge loan product does not go through full underwriting, as it doesn’t have as many guidelines and criteria. There isn’t any minimum FICO requirement for the borrower, either. 

Real Estate Investors who aren’t able to secure financing with a traditional mortgage loan for their investment property, can turn to private money lenders, like Stratton Equities to obtain funding.    

The Difference Between Bridge Loans & Term Loans

There are many things to take into account when you invest in real estate. One of the key ones is what type of loan to take out. Whether it is a hard money loan or a soft money loan, you need to be aware of which one fits your needs and financial situation the best. Bridge loans are a type of hard money loan. Also known as gap financing, interim financing, and swing loans, these short-term loans allow you to put a contingency-free offer on an investment property.

 

They are usually 3 to 6 months long but can be longer depending on the situation. For real estate investing, one would use a bridge loan when they are looking to invest in a new property but haven’t sold their previous property. So, borrowers are using the equity from their current property as a downpayment for the purchase of a new property. What bridge loans do is bridge the gap between payments, they roll the mortgages of two houses together, thus giving the investor breathing room and flexibility as they wait for their old property to be sold. 

Since they are short-term, bridge loans usually have higher interest rates than term loans. They are also sometimes more difficult for investors to obtain. Lenders only offer real estate bridge loans to borrowers with excellent credit ratings and low debt-to-income ratios. Before taking out a bridge loan, there are certain things you need to take into consideration. These types of loans seldom come with protections for the borrower if the sale of the old house falls through. In such a case, the lender could go as far as a foreclosure on the former property following the expired bridging loan extensions. Given this risk, it is very important to carefully consider what you can afford and how fast houses sell in your market before taking out a bridge loan. 

Bridge loans have a faster approval process than traditional loans. They are great for when an investor requires fast and convenient access to funds. Investors who take out these loans are willing to accept the high interest rates, as they know the loan is short-term and have the plan and assets to pay it off. They are an excellent type of loan for short-term real estate investing. 

Unlike bridge loans, a term loan is a long-term loan between a borrower and a lender. The lender supplies money upfront and receives this money back through a series of small payments over a certain period of time. The intervals could be biweekly or monthly, over a specified period.

There are short, intermediate, and long-term payments for these loans. Term loans usually last between one and ten years but may last as long as 30 years in some cases. 

Term loans fall under the category of soft money loans because they are usually offered through a bank or mortgage company. Also, soft loans are dependent on the borrower's credit score and property LTV (loan-to-value) rather than their income. A term loan generally implies an unfixed interest rate will add additional balance to be repaid. Unlike a lot of loans, term loans come with lower interest rates, as low as 6%. It also has greater security, tax-deductible, and boosts credit score. At the same time, One thing to consider when getting a term loan is whether the interest rate is fixed or floating. A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during the set-rate period of the loan.

 

This makes it possible for a borrower to accurately predict future payments. A floating interest rate is also called a variable or adjustable rate. They are debts such as a loan, bond, mortgage, or credit, which have no fixed interest rate.

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