What is the difference between..... - Posted by PBoone

Posted by PBoone on November 15, 2000 at 11:45:42:

Thank you, as always you are a wealth of unconditional giving knowledge
Talk to you later

What is the difference between… - Posted by PBoone

Posted by PBoone on November 14, 2000 at 18:36:58:

A Bridge loan and a Jumbo Loan how are they attained and What do lenders look for to accomplish the deal?

Re: What is the difference between… - Posted by Ed Garcia

Posted by Ed Garcia on November 15, 2000 at 11:37:08:

Mr. Boone,

How are you? Pat, a “Bridge loan” and a Jumbo loan have nothing to do with one another.
A Bridge loan has two different meanings depending on what part of the country you’re in. A “Bridge loan” is the same as a “Swing loan”. For example if I were to purchase a property and need money for down payment, I can borrow against my existing property temporarily until I sell it. I’m swinging my equity from property (A) to property (B). So you see if I have $40,000 lendable equity in property (A) I can take it out and put it into property (B) until I sell property (A).

Another definition of “Bridge loan” is the same as a “Gap loan”. Basically Pat, it’s a second money purchase loan. I want to purchase a property for $100,000. There is an existing loan of $60,000 at a great rate with 11 years remaining on a 30-year amortized loan. Rather than pay off the loan, I decide to take out a second mortgage, borrowing the difference between my first and my down payment. Back to our example, I have a first for $60,000 and my down payment is $20,000, so I’m going to get a $20,000 “Bridge loan” or in California, we call it a “Gap loan” for the difference.

A “Jumbo loan” is a loan over $ 253,700, which is suppose to change after Nov 2nd to $265,000. This loan amount is based on Fannie Mae/Freddie Mac guidelines. A jumbo loan amount can vary from lender to lender and the secondary market place. So in essence, the word JUMBO mean larger than normal, or a loan amount over the lenders maximum.

As far as to how are they attained, that can vary from lender to lender, the borrower, and of course, the deal. I think the important thing here is deal structuring.

Ed Garcia