A bridge loan can serve as a helpful financing tool for purchasing a multi-family property. Bridge loans are beneficial for the interim because bridge loans provide ample time for the fixed rate and long-term exit. Furthermore, there is more time to develop financing solutions and reviewing the lender’s credit agency. Hunt Mortgage Group serves clients seeking bridge loans for multi-family apartments, cooperative buildings, manufactured housing and student housing. In order to determine if a bridge loan is the right financing option, Hunt Mortgage Group can offer the best advice for any questions concerning bridge loans for multi-family properties.

What is the Purpose of a Bridge Loan?

Bridge loans are commonly used for multi-family or commercial properties when the buyer needs funds to complete the sale of the property and/or prepare it to meet the required standards for a long-term loan. A bridge loan serves as a financing option to bring a property to a fully stabilized value and to bridge an acquisition for timing purposes. It also helps to facilitate a positive cash flow by having a lender and their credit teams establish an acceptable loan amount for the property’s current performance.

In addition, if the maturity date of the property is approaching and it doesn’t qualify for a high quality loan, then bridge loan will assist in allowing borrowers to keep their property; meanwhile, if the borrower lacks monetary strength, then the loan can assist in acquiring a property. When you find a multi-family property worth investing in, you should consider a bridge loan in order to avoid missing an opportunity due to an inability to finalize your finances within the time frame.

Who Should Apply For a Bridge Loan?

It is beneficial to apply for a bridge loan when you need more time to overcome financial delays including lingering credit issues, a lack of consistent cash flow or a need to close on a property quickly. Bridge loan lenders do not have standard guidelines and therefore the structure of bridge loans vary. Bridge loans provide acquisition and refinancing opportunities for multi-family housing that doesn’t meet minimum requirements for permanent financing. If you are in need of closing on your property in a short period of time or require a flexible repayment schedule, bridge loan financing options may be for you. Furthermore, you should consider a bridge loan if the multi-family property needs renovation that exceeds a high-quality loan.

How Much Do Bridge Loans Cost?

Bridge loans typically do not come cheap to borrowers because it is a highly attractive market. On average, bridge loans typically run about two percentage points more than the interest rate charged for a 30-year, fixed-rate mortgage. Additionally, a lender may charge higher fees. Bridge loans are also short-term and borrowers may need to seek replacement options within 24 months. At Hunt Mortgage Group, we highly recommend that borrowers seeking a bridge loan check for any prepayment penalties in the loan’s terms and conditions.

What Are the Benefits of Bridge Loans?

Although there are additional expenses, bridge loans allow homeowners to confidently finance or refinance an investment with less financial qualifications and a quicker closing process. Loan amounts are also determined by total project cost and completed value, so an income in place is not necessary, though it does help to lower rates. Furthermore, a bridge loan may not require a payment for a few months, giving borrowers ample time to sell their home and situate themselves in a new one.

Obtaining A Bridge Loan Through Hunt Mortgage Group

At Hunt Mortgage Group, we offer the following two types of bridge loans:

  • Proprietary lending programs with nonrecourse, first mortgage financing for the acquisition or refinancing of stabilized multi-family properties.
  • Bridge financing for pre-stabilization multi-family properties expected to meet permanent financing criteria within 36 months of closing.

Hunt Mortgage Group is licensed with Fannie Mae DUS™ lender, a Freddie Mac Program Plus™ seller/servicer, and a Federal Housing Administration (FHA) Multi-family Accelerated Processing (MAP). Are you interested in learning more about bridge loans and how they can benefit your financing needs? Contact a Hunt Mortgage Group near you to learn more about bridge loans today.