How does a Bridge Loan Work?

The house must be listed

There must be a listing sheet for the lender no For Sale By Owner

There must be net equity in the house to make the loan

If you take 93% of the list price that will take out any realtor commissions and

closing costs

New purchase of 400,000.

So on a 360,000 listed house 93% is 334,800

If the client owes 229,327 then we can use 80% of the 334,800 to figure out the

bridge loan, the difference between 334,800 and 229,327 is 105,473.

The amount that you can use for the bridge loan is 360,000 times 80% which is

288,000 the subtract 229,327 from that number and you get 58,673 that is the

amount that the client can use to put down on the new house.

Now in this example we need to do an 80-20 to get to the ratio’s that we need to

get to and avoid PMI 320,000 first mortgage and a 21,327 second mortgage with

58,673 down.

When the listed house sells then they can pay off the line of equity with the

remaining cash. They will have 46,800 in cash left after the listing house is

closed on.

The bridge loan must fund 4 days before the purchase of the new house, we have

to get an appraisal and close just like a normal loan fees and title will be about

1,000.

Realtor advantage, there client can go in with a none contingent offer on a house

The old house payment is not counted against the new loan in the ratios.

Two years job history in the same field

This can be done on a no doc client also

Minimum scores 620 and as long as we get a DU or LP except.

Second Example

Example no. two 345,000 list price on house purchase price is 555,000 the client

owes 126,698 on current house.

345,000 x .93 = 320,850

345,000 x 80% is 276 ,000

276,000 – 126,698 amt owed on the house = 149,302 which is the amount of the

bridge loan.

555,000 – 149,302 = 405,698 in this case we have to use the 149,302 to put down.

If we were closer to 35% equity instead of what we have then we would only have

57,000 to work with and then we would do a 80% first for 444,000 and a bridge

loan for 51,750 plus 1,000 to close on it we can do an 20% second and have the

client put the 51,750 into the second and have a 59,250 balance left on the equity

line.

Presented by:Robert RatimorszkyMortgage PlannerCell: 847-774-9657Email: ratimortgage@gmail.com