Bridge Loans Houston Investors Trust

Using bridge loans, Houston real estate investors have fast, flexible access to purchasing properties.

Bridge Loans for Real Estate Investors in Texas

A Bridge Loan allows you quick access to financing for purchasing properties before selling a currently owned property. People also refer to it as a swing loan, gap loan, or gap financing.

Access to fast funding provides an advantage to real estate investors like you to buy properties at a discount from the seller in exchange for the convenience and speed of the transaction. These loans leverage your existing equity so you can seamlessly purchase and sell without missing an opportunity for an investment property.

How a Bridge Loan Can Help You Buy Your Next House

Another standard home-buying solution is to use this type of loan to purchase your new home before selling your current one. This type of short-term loan is best for areas where homes sell quickly, especially markets where multiple offers often compete.

These loans help you avoid making a contingent offer, which will be less appealing than offers from buyers who already have funds.

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How Do Real Estate Bridge Loans Work?

Generally, there are two ways to use bridge loans in Houston, TX. One way is to pay off your current mortgage, putting any excess toward your new down payment. Another is to use your existing equity to take a second mortgage for your new down payment.

1. Mortgage Payoff

Pay off the existing mortgage and use the remaining balance.

For example, let’s say the current property value is $200k, and you still owe $125k on the mortgage. A loan for 80% of its value ($160k) would pay off the balance with $35k left over. After closing costs and fees (~$5k), the remaining balance of $30k is free to be used for a new down payment.

bridge loans example

2. Second Mortgage

Use existing equity and a second mortgage.

In a similar example, let’s say the property’s current value is $200k, and you still owe $125k on the mortgage. The existing equity is $75k. A bridge loan for 80% of the equity would provide $60k towards the new down payment.

second mortgage

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    Bridge Loans FAQ

    A bridge loan is a type of short-term loan. The name comes from the way it bridges the gap between buying one home and selling another. Occasionally, investors are ready to buy a new property before the sell a previous project. While that means they don’t have the profits to work with, the loan allows them to make a new down payment and begin renovations. 

    When you a challenge like this, King James Lending is here to help! We provide bridge loans Houston investors can utilize to grow their portfolio.

    There are several benefits to this type of loan. Let’s take a look at some of the core advantages. 

    1. When the market is hot, it means you have to compete with other buyers. With our bridge loans, Houston investors can start a new project as another wraps up. 
    2. The loan can remove any financial contingencies on your offer to buy, which is desirable for sellers because it increases the likelihood of closing.
    3. When you work with a private lender like King James, we work fast to help you close your deal in a timely manner. Quick financing can make a huge difference in your portfolio.

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