A Bay Area home buyer acquired this Union City short sale at a below-market value using a 12-month private money bridge loan from First Capital Trust Deeds of Walnut Creek.
Challenge: The buyer of this Union City, California short sale was acquiring the home well below market value and wanted to carry the 12-month bridge loan for just six months. Why six months? Well, after six months of ownership, they could use the new appraised value (approximately $650,000) to get a cash-out conventional loan through Fannie Mae or Freddie Mac, which would allow them to recoup a large portion of their down payment money. Pretty good idea, right?
Solution: 12-Month bridge funding at 9.99% Interest-Only with a six month prepayment penalty. Our borrowers liked the terms because they knew they had to wait out the six months to use the new value in order to get the cash-out loan. The trust trust deed investor liked the guarantee of six months of interest payments they’d receive on their money. Plus, their was $150K of built-in equity at the time of purchase which made the future conventional cash-out refinance nearly a sure thing.
Private Money Bridge Loan Financing Terms:
- $350,000 Loan Amount (70% LTV)
- 9.99% Interest-Only
- 12-Month Term
- No Prepayment Penalty