By admin1
Bridge loan cost example
Below is an example of how much a $100,000 bridge loan might cost, along with possible fees.
You find a home you’d like to purchase, but you’re still waiting for your current Oklahoma house to sell. The new home’s asking price is $240,000. You can only come up with $140,000, but you have at least another $100,000 worth of equity in your current property. You want to access that money to cover the shortfall before your new home is sold to another buyer.
| Net loan amount | $100,000 | $100,000 |
| Interest (varies) | 10% (example for 6 months) | $5,000 |
| Origination fee | 1.5% | $1,500 |
| Underwriting fee | $1,000 | $1,000 |
| Appraisal fee | $500 | $500 |
| Closing cost* | 2% | $2,000 |
| Total repayable amount | $110,000 |
*These closing costs typically range between 1.5% and 3%
Who provides bridge loans in Oklahoma?
In Oklahoma, the pool of lenders offering bridge loans might be smaller due to the specific underwriting requirements associated with these loans. If you’re considering a bridge loan, exploring multiple lending options is a prudent step.
Here are some common sources where you might find bridge loans:
- Your mortgage lender: This is often the first stop for many borrowers, as these lending institutions offer customer loyalty benefits or streamlined services for existing customers.
- Local banks: They might provide more personalized service and have a better understanding of the local real estate market conditions.
- Credit unions: They often offer competitive rates to members.
- Hard-money lenders: Hard-money lending companies in Oklahoma are typically more flexible with their lending criteria but may charge higher interest rates.
- Non-qualified mortgage lenders: These lenders provide loans that don’t meet the strict criteria of conventional mortgages, which can be useful if you don’t fit traditional lending molds.
Some innovative real estate companies also offer integrated services, including bridge loans, simplifying the process of navigating between buying and selling homes. We’ll explore how such companies can assist you in a later section of this guide.
Are there alternatives to bridge loans in Oklahoma?
While a bridge loan might not work for every Oklahoma homeowner’s unique situation, there are alternatives to consider:
Home equity loan: A home equity loan, sometimes called an HEL, allows you to borrow money using the equity in your home as collateral. Interest rates for a home equity loan can be more expensive than your current rate on your first mortgage, but instead of completing a cash-out refinance (paying off the first mortgage and borrowing cash), you can just borrow the money you need at the higher interest rate and leave your first mortgage at its lower rate.
Home equity line of credit (HELOC): Another option to use your existing equity is a HELOC. This allows you to pull money out of your property for a relatively low interest rate. Instead of receiving the money all at once, your lender will extend a line of credit for you to borrow against.
You might, however, have to pay an early closure fee if you open this line of credit and close it very soon after. Unlike a home equity loan, HELOCs typically have adjustable interest rates.
