Eyeing a new home in San Rafael but not ready to sell your current place first? In a competitive Marin market, sellers often expect strong, non‑contingent offers, which can put you in a tough spot. If you want to move quickly and keep control of your timeline, a bridge loan might be the tool that helps you buy first and sell second. In this guide, you’ll learn how bridge loans work in California, when they make sense in San Rafael, what they cost, the risks, practical alternatives, and a simple checklist to move forward with confidence. Let’s dive in.
What is a bridge loan?
A bridge loan is short‑term financing that fills the gap between buying your next home and selling your current one. It is typically secured by your existing property and lets you make a non‑contingent offer while you wait for your sale proceeds.
Most products are interest‑only during the term. The principal is usually paid off when your current home sells. Terms are commonly 6 to 12 months, with potential extensions depending on the lender.
How a bridge loan works
- The lender records a lien on your current home, sometimes alongside your first mortgage.
- You may make interest‑only payments while you hold both properties.
- The loan is repaid at the close of your sale from the proceeds.
- Underwriting includes your new mortgage and the bridge obligation, which affects your debt‑to‑income ratio.
- Rates and fees are generally higher than a standard 30‑year mortgage due to the short term and added risk.
How it works in California
In California, a bridge loan functions like other secured loans. The lender records a deed of trust on your current home, and title and escrow coordinate payoffs and reconveyance when you sell. If a lender cross‑collateralizes the new purchase, escrow will manage both sides so liens clear properly at closing.
A double escrow, where both homes close the same day, can work in some cases. In fast markets, it is harder to align, which is why buyers consider a bridge loan to present a clean, non‑contingent offer.
You will receive standard lending disclosures. Interest deductibility can be complex and depends on how funds are used and current tax law, so it is wise to consult a tax professional for specific guidance.
When it makes sense in San Rafael
San Rafael is part of the broader Bay Area, which has historically seen higher prices, lower inventory, and competitive offer activity. In this environment, many sellers prefer offers without a sale contingency.
You might consider a bridge loan if you:
- Need to write a non‑contingent offer to be competitive and have meaningful equity.
- Do not want to sell first or move twice.
- Find the right home before your current home is ready to list or under contract.
- Value certainty and speed more than the added carrying cost.
Costs to expect
Exact pricing varies by lender and market conditions. Expect the following categories:
- Interest charges that are typically higher than a long‑term mortgage rate.
- Origination and lender fees, sometimes quoted as points.
- Appraisals for one or both properties.
- Title, recording, and escrow fees for the bridge lien.
- Carrying costs if you hold both homes, including insurance, taxes, utilities, and any new mortgage payment.
- Possible extension fees if your sale takes longer than planned.
Always request a written Loan Estimate so you can compare options.
Typical timelines
- Application to funding: several business days to a few weeks, depending on underwriting and appraisal timing.
- Term length: commonly 6 to 12 months, with possible extensions.
- Repayment: paid off at the sale closing. Reconveyance of the lien can take additional administrative days after payoff.
Eligibility and lender criteria
- Equity: many lenders expect at least about 15 to 25 percent equity in your current home.
- Debt‑to‑income: your new mortgage and the bridge loan are both counted, which can reduce your buying power.
- Credit and documentation: strong credit, stable income, clear title, and full documentation are typical.
- Combined loan‑to‑value: lenders look at the total of all loans on your current home and the new mortgage.
Benefits to weigh
- Ability to write a non‑contingent, competitive offer.
- Avoid moving twice or relying on temporary housing.
- Flexibility to buy the right home on your timeline and then sell.
Risks to consider
- Higher cost compared with a standard mortgage due to rates and fees.
- Carrying two properties if your home does not sell quickly.
- Market risk if conditions soften and time on market extends.
- Added complexity across liens, payoffs, and reconveyance.
- Qualification risk if the bridge obligation tightens your debt‑to‑income.
Smart alternatives
- HELOC or home equity loan on your current home, which can be lower cost but may reduce available equity and still requires approval.
- Sell first, then buy, which removes bridge costs but can mean interim housing or storage.
- Contingent offer, which may work in slower segments but is often less competitive.
- Buy‑before‑you‑sell provider programs that back or purchase your next home for you. These can add convenience but may include higher fees and contract requirements that you should review carefully.
- Cross‑collateralized financing from a mortgage lender that blends short‑term and permanent financing.
A step‑by‑step plan
Use this practical checklist to move forward with clarity:
- Confirm current San Rafael market dynamics, such as days on market and how often sellers accept contingencies.
- Calculate your equity by documenting mortgage balances and a realistic list price range.
- Obtain pre‑approval for your new mortgage, and request a written Loan Estimate for the bridge product.
- Ask lenders:
- Term length, and whether extensions are available
- Interest type and whether payments are interest‑only
- All origination and appraisal fees
- How payoff happens at sale and how long reconveyance takes
- How the bridge affects your qualifying for the new loan
- Build a contingency plan in case your home does not sell within the bridge term.
- Consult a tax advisor on potential interest deductibility and a title or escrow professional about lien recording and reconveyance.
Sample timeline
- Week 0: Strategy session with your agent and lender to confirm eligibility and timelines.
- Weeks 1–2: Appraisals ordered, underwriting completed, and a bridge commitment issued.
- Weeks 2–4: Bridge funds, lien recorded on your current home, and you close on your new purchase non‑contingent.
- Weeks 4–12+: List and sell your current home. At closing, escrow pays off the bridge loan and reconveys the lien.
Actual timing varies by lender and property specifics.
Local considerations for San Rafael
- Inventory and demand: competitive listings can make non‑contingent offers more successful. Stay current on neighborhood‑level metrics.
- Commute and schools: the ability to secure your next home quickly can support commuting needs and school planning. Use neutral, factual criteria to guide your search.
- Closing costs: Marin County transfer taxes, escrow fees, and recording fees apply on sales and purchases. Factor these into net proceeds and cash needs.
- Partners: work with a mortgage professional experienced in Marin bridge products, a responsive title company, and an agent who is used to coordinating timelines and contingencies in San Rafael.
Ready to explore whether a bridge loan fits your move in San Rafael? Reach out for tailored guidance on timing, financing, and strategy. Request a Private Consultation with Emily Schaffer to model costs, compare alternatives, and align your purchase and sale with confidence.
FAQs
How do bridge loans help San Rafael buyers compete?
- They allow you to write a non‑contingent offer, which can be more attractive to sellers in a competitive, low‑inventory environment.
What equity do I need for a bridge loan on my Marin home?
- Many lenders look for about 15 to 25 percent equity in your current home, though exact requirements vary by lender and product.
Do bridge loans affect my ability to qualify for the new mortgage?
- Yes. Lenders include the bridge obligation in your debt‑to‑income ratio, which can reduce the loan amount you qualify for.
Are bridge loans more expensive than standard mortgages?
- Generally yes. Expect higher interest rates and fees, plus carrying costs if you hold both properties during the sale period.
What if my current San Rafael home does not sell in time?
- You may need to seek an extension, cover two properties longer, or adjust pricing and marketing. Build this contingency into your plan early.
