Trying to buy your next San Rafael home before you sell your current one? A bridge loan can make that possible by letting you unlock equity for your next down payment. If you want to stay competitive and avoid a sale contingency, this guide will help you weigh how bridge loans work, what they cost, and the risks to plan for. You’ll also see practical steps, alternatives, and local tips so you can decide with confidence. Let’s dive in.
What is a bridge loan?
A bridge loan is a short-term loan that lets you use the equity in your current home to help fund the purchase of your next home before your sale closes. It is commonly interest-only and repaid when your existing home sells or when the loan reaches maturity. In San Rafael, move-up buyers often use bridge loans to compete without a home sale contingency.
Common structures
- Closed-end bridge: You receive a lump sum secured by your current home and repay it when your home sells. Payments are often interest-only until payoff.
- HELOC or second mortgage used as a bridge: A short-term line or second loan that functions like a bridge with interest-only payments and principal repaid later.
- Buy-before-you-sell products: Some lenders offer portfolio bridge options designed to work alongside your new purchase loan.
Key differences include how and when you repay, whether you can carry both mortgages, documentation requirements, and how the funds can be applied to your purchase.
How it works in San Rafael
Step-by-step process
- Equity check: Confirm your mortgage balance and current market value with a broker CMA.
- Pre-approval: Get pre-approved for your purchase mortgage and apply for a bridge loan with a lender that serves Marin County.
- Valuation and underwriting: Expect an appraisal or valuation review and standard income and asset documentation.
- Close the bridge: Funds become available for your new home’s down payment.
- Close on the new home: Often coordinated close to the bridge funding.
- Sell your current home: Use the sale proceeds to repay the bridge loan and any accrued interest and fees.
Typical timelines
- Bridge approval and closing: Often 7 to 30 days, depending on lender speed, documentation, and appraisal needs.
- Term length: Commonly 6 to 12 months; some lenders offer longer, which can raise costs.
- Escrow norms: Bay Area escrows often run 30 to 45 days, though timing varies by agreement. Plan your bridge maturity with a cushion.
Documents to gather
- Recent mortgage statement and payoff amount for your current loan
- Income documents such as pay stubs and tax returns
- Bank and asset statements
- Appraisal or broker price opinion for your current home
- Purchase contract for your new home (when available)
- Title report
Costs and loan sizing
How lenders size bridges
Lenders look at your available equity and set a combined loan-to-value limit, often in the 70 to 80 percent range. They consider your existing mortgage balance, credit profile, debt-to-income ratio, and the appraised value of your home.
Example (illustrative): If your San Rafael home is valued at $1,200,000 and your mortgage balance is $400,000, equity appears to be $800,000. If a lender’s combined loan-to-value limit is 80 percent ($960,000 total financing), you might access up to $560,000 across both loans. Your actual approval depends on full underwriting.
Rates and fees to expect
Bridge loans usually carry higher interest than standard first mortgages. Common costs include an origination fee, appraisal, escrow and closing costs, and occasionally a commitment or exit fee. Many are interest-only.
Example (illustrative): A $200,000 bridge at 6 percent interest for six months costs about $6,000 in interest, plus any origination fee and closing costs.
Budgeting for two homes
Plan for the possibility of carrying two properties for several months. Budget for:
- Bridge loan interest
- New mortgage payment
- Property taxes, insurance, and utilities for both homes
- Maintenance and staging costs for the home you are selling
Tax note: Bridge interest may be deductible if the loan is secured by a qualified residence and used to buy or improve a qualified home. Tax rules are complex; consult a CPA.
Benefits and risks
Why use a bridge here
- Competitive edge: Write a non-contingent offer, which can be more attractive to sellers.
- Fewer moves: Move directly into your new home and avoid temporary housing.
- Negotiation strength: More flexible closing timelines without a sale contingency.
Key risks to weigh
- Higher cost: Rates and fees are typically higher than a standard mortgage or HELOC.
- Repayment risk: If your current home takes longer to sell, costs and pressure can increase.
- Double carrying: You may carry two properties until your sale closes.
- Appraisal and market risk: If your home appraises low or the market slows, available equity and proceeds may be lower than expected.
Alternatives to compare
- HELOC or home equity loan: Often lower cost but may take longer to set up and can be limited by your current lender’s policies.
- Sale-of-home contingency: Reduces risk but weakens your offer in faster markets.
- Rent-back after sale: Sell first, then rent your home back for a short period while you buy.
- Sale-leaseback or quick-close cash buyers: Faster but may come at a discount to market value.
- Purchase-lender bridge solutions: Some lenders integrate the bridge with your new mortgage for simpler coordination.
- Personal funds, retirement accounts, or gifts: Can help with a down payment but carry their own rules and risks.
Illustrative scenarios
Scenario A: Fast market, modest equity (illustrative)
You own a San Rafael home valued at $1,000,000 with a $500,000 mortgage. You want to buy a $1,300,000 home. A bridge loan could provide the down payment so you can make a non-contingent offer. If your sale closes in about 30 days, your bridge cost may be modest. If it takes six months or more, interest and carrying costs add up.
Scenario B: Slower market, more equity (illustrative)
You own a $1,500,000 home with a $200,000 balance. You may qualify for a larger bridge or a HELOC. In a slower market, you might list first or negotiate a rent-back to reduce the period of double carrying costs.
Practical checklist
- Get a conservative broker CMA and consider ordering an appraisal before applying.
- Shop at least two bridge lenders and compare CLTV limits, fees, total cost, and maturity terms.
- Align your purchase and bridge underwriting so debt-to-income is handled correctly.
- Set the bridge term with cushion beyond typical days on market.
- Budget for two to six months of double housing costs.
- Use proven sale strategies to reduce time on market: pricing, light repairs, pre-inspections, and professional staging.
- Confirm tax and legal details with your CPA and, if needed, your attorney.
Lender questions to ask
- What is the maximum combined loan-to-value for my situation?
- How will you treat the bridge payment when qualifying me for the new mortgage?
- What are the total costs: rate, origination fee, appraisal, closing, and any exit fee?
- How fast can you close and what documentation is required?
- What happens if my home does not sell before the bridge matures?
How we support your move
You deserve a smooth, well-sequenced plan. With boutique, concierge-level service and the backing of the Compass platform, you get coordinated guidance across both sides of your move. We help you:
- Price and prepare your San Rafael home to shorten market time using curated staging and presentation.
- Coordinate lender timelines so your bridge and purchase stay aligned.
- Leverage Compass tools like Concierge for pre-sale improvements and Private Exclusives to test interest before going live.
- Navigate offer strategy so you stay competitive without unnecessary risk.
Ready to explore whether a bridge loan fits your plan? Connect with Stephen J Bartlett to map your options and timing.
FAQs
What is a bridge loan for buying before selling?
- A bridge loan is a short-term, interest-bearing loan that uses equity in your current home to fund your next down payment, typically repaid when your home sells.
How long do bridge loans take to close in Marin?
- Many lenders can close in 7 to 30 days, depending on documentation and valuation requirements; specialty lenders may move faster.
What does a bridge loan cost compared to a HELOC?
- Bridge loans usually have higher rates and fees than HELOCs; you may see origination, appraisal, closing costs, and interest-only payments during the term.
How do lenders decide my bridge loan amount?
- Lenders look at equity and set a combined loan-to-value cap, often in the 70 to 80 percent range, plus your income, credit, and debt-to-income ratio.
What happens if my San Rafael home takes longer to sell?
- You may carry the bridge longer, pay more interest, and face pressure at maturity; plan a cushion and consider strategies to speed your sale.
Are bridge loan interest payments tax deductible?
- Interest may be deductible if secured by a qualified residence and used to buy or improve a qualified home; consult a CPA for your specific situation.
