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Special Reports
Jumbo and Nonconforming Lending
AAXA Offering Bridge Loans for Homeowners
By Alton Gary Simpson
As housing inventory rises in many parts of the country because of the recent
slowdown in the market, many homeowners have been forced to remain in their properties despite the potential need
to relocate for employment or other obligations.
AAXA Discount Mortgage here has decided to start offering bridge loan programs
to homeowners who are considering purchasing real estate while their existing property remains listed for sale.
"It was pretty obvious to us that there was a need for this product," said Brian Mitchell, vice president
of operations, AAXA. He said that because of the condition of the housing market, the company was fielding an increasing
number of phone calls from borrowers with homes languishing on the market. Prior to this product's introduction,
AAXA was turning away borrowers who were in need of this type of financing.
AAXA has two bridge loan programs for those who need temporary financing assistance.
The first can be used to refinance any existing mortgages on the for-sale property to pay for title expenses and
any loan fees, and to cover up to nine months of mortgage interest in advance. Any remaining proceeds can be used
for the purchase of a new property. Borrowers can take out a loan for up to 80% of the available equity in their
current home. Mr. Mitchell added that an advantage of this loan is that it does not count towards the borrower's
debt-to-income ratio when they go to obtain financing on their new home.
The second product is essentially a home-equity line of credit of up to 95% for
primary residences and up to 80% for second homes. He explained that it is not truly considered a bridge loan because
a borrower's home must be under contract. It is a short-term home-equity loan that allows a borrower to move into
a new home or break ground on new construction before their current home sells. "This bridges that short-term
gap if you can't line up the closing date and getting the funds out of your current home," he said. It does
not require private mortgage insurance and its interest-only feature keep payments low while the other property
is on the market.
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