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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 North Carolina house to sell. The asking price for the new home is $350,000. You can only come up with $250,000, 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 selling your new home 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 | $700 | $700 |
| Closing cost* | 2% | $2,000 |
| Total repayable amount | $110,200 |
*These closing costs typically range between 1.5% and 3%.
Who provides bridge loans in North Carolina?
In North Carolina, the availability of bridge loans may be somewhat limited due to the specific underwriting requirements associated with this type of loan. Exploring options with various lenders is a good idea if you’re considering this financing solution. The most common sources for bridge loans in the state include:
- Your mortgage lender: Start with the institution where you have your current mortgage, as they may offer bridge loans to existing customers.
- Local banks: Many community banks in North Carolina provide personalized lending services, including bridge loans.
- Credit unions: Member-owned credit unions often have competitive loan options and may offer more favorable terms.
- Hard-money lenders: Hard money lending institutions in North Carolina offer loans based on property value rather than solely on borrower creditworthiness.
- Non-qualified mortgage (non-QM) lenders: These lenders offer loans that don’t meet the strict federal guidelines for mortgages, which can include bridge loans.
Some modern real estate companies also offer services to help you find a bridge loan, streamlining the gap between buying and selling a home. More details on this will be provided later in the post.
Are there alternatives to bridge loans in North Carolina?
If you think a bridge loan won’t work for your situation, there are alternatives to consider:
Home equity loan: 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 may 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.
