For many borrowers and brokers, the mortgage market begins and ends with home loans backed by Fannie Mae, Freddie Mac, the FHA and the VA.
While those government-backed loans get most of the attention in the mortgage market, savvy brokers know that not all borrowers fit into the strict requirements of the agency programs. For many borrowers and brokers, the non-QM mortgages are the best – and maybe the only – option. Non-QM loans are designed for borrowers who don’t meet traditional underwriting guidelines. Fortunately for the mortgage industry and the American public, non-QM loans, with their more flexible guidelines, are experiencing robust growth.
There are many flavors of non-QM loans, including bank statement loans and investor property mortgages. In this installment of non-QM 101, we’re going to focus on bridge loans.
Bridge financing is a fantastic addition to your lineup of loan offerings because of the advantage your homebuyer clients will experience as they shop for a home. Bridge loans can be a game-changer – they let your clients access the equity in their current home to make stronger offers on their next home. A bridge loan puts your client in a more competitive position compared to other bidders who must wait to sell their current homes first. A bridge loan lets your client make a winning offer, and the client is required to make no monthly payments.
How is a Bridge Loan used?
A bridge loan is a short-term loan that can be used in conjunction with the loan on a new purchase property. The bridge loan pays off the existing mortgage AND provides cash out of the equity to be used as a down payment on the new home. When you team up with LendSure, both the bridge and new purchase loan must be done with us.
Bridge Loan on Existing Property
The existing property must be listed for sale and the bridge loan gets paid off when the home gets sold. The bridge loan is a short-term one-year loan, with no monthly payments, and no prepayment penalties. Because there are not payments, the DTI is not calculated in the existing property’s loan.
Loan to Purchase the New Property
The borrower can now make an offer on their new home by using the cash-out proceeds from the bridge loan as a down payment. A wide variety of loan programs are also available to choose from. For example, income from self-employed borrowers can be calculated using bank statements.
Why should I consider a bridge loan for my borrowers?
Bridge Loan can be a perfect solution for a borrower seeking to purchase properties, but whose cash is tied up in another property. By working with LendSure, you’ll receive guidance working through the details of each step in the process. Bridge Loans empower your borrowers to move fast on a desired property without having to first sell off another asset. It’s an effective way to stand out and be successful in a highly competitive purchase market.
How does it work?
At LendSure, prequalification for bridge loans can take as little as 24 hours, and full conditional approval is usually complete within 48-72 hours. LendSure offers quick funding times and a customer-friendly approach to debt-to-income calculation.
Here’s a step-by-step guide:
- The departure home is listed for sale.
- Buyer shops for their new home.
- Equity from the departure property is used as a down payment on the new home.
- Bridge Loan and new home purchase loan fund simultaneously.
- Departure property sells and the bridge loan is paid off.
LendSure’s video tutorial walks through the details, but in the bridge loan scenario, there are two separate loans. The bridge loan is a cash-out mortgage with a 75% LTV. It’s structured as a 12-month one-payment loan, with no monthly payments. There’s also a new purchase money loan with a 50% LTV and a 5/1 ARM amortization schedule.
By providing fast solutions to clients, your business will get to enjoy a high potential for growth. The borrower makes a one-time repayment due at the end of the loan term or when the property sells, with interest accruing during the life of the loan. Other restrictions and limitations may apply. Granting of loan is subject to the credit and policy requirements of LendSure Mortgage Corp.
Why should I become a bridge loan expert?
Our bridge loans can help you build a stronger business relationship with your realtor associates, which leads to more referrals. Offering non-QM options like bridge loans to your borrowers, means you’re putting their needs first by offering customized solutions that help them accomplish their goals.
In today’s increasingly competitive real estate landscape, buyers need to be empowered with swift, successful transactions. Bridge loans can be the perfect solution for buyers seeking to purchase properties, but whose cash is tied up in another property. It’s that simple.
Why LendSure Mortgage Corp.?
Headquartered in San Diego, California, LendSure Mortgage Corp. was founded in 2015 to help mortgage professionals better serve their clientele by offering a wider range of programs to meet their needs. LendSure Mortgage Corp. offers a comprehensive range of non-QM loan programs for borrowers that don’t fit conforming guidelines.
When you partner with LendSure Mortgage Corp., you get access to outstanding loan products, superior customer support and outstanding guidance throughout the process, thus empowering you with a competitive edge. By expanding your lineup of options to include non-QM loan solutions as well, you’ll prove to be an innovative resource with a full arsenal of tools available to meet almost any need.
Are you ready to benefit from a commonsense approach to lending? Contact us today to learn more about non-QM loans and how partnering with LendSure Mortgage Corp. can help grow your bottom line.