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Why a California Bridge Loan Might Be the Key to Your Next Real Estate Move

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Selling one home while buying another can feel overwhelming when the timing of each sale doesn’t line up. Bridge loans offer a short-term solution that give you the funds to purchase your next home while your current one is still on the market.

These loans are a lifesaver in competitive housing markets like San Francisco and Orange County where buyers need every advantage. Let’s explore two inspiring examples of how equity-rich California homeowners used bridge loans to secure their dream homes without the stress of selling first.

Sam & Lily’s Story: Upgrading to a Family-Friendly Home in San Francisco

Sam and Lily owned a $2.5 million condo free and clear in the Mission District but as their family expanded their two-bedroom space started to feel more like a shoebox. Their goal was a $3.8 million single-family home in Noe Valley, complete with a yard and plenty of room for a growing family.

The biggest challenge wasn’t affordability; it was timing. Selling their condo would take time and they didn’t want to lose out on their ideal home in a highly competitive market. A bridge loan solved this problem.

Here’s how it worked:

  • The couple borrowed $1.5 million from the equity in their condo covering the down payment on their new home. Then they got a new first loan for $2,000,000 and added $300,000 from their savings.
  • The bridge loan helped them to make a competitive attractive offer which stood out in a market where low down payment offers are often dismissed.
  • After they bought the home, they stayed in their condo to prepare it for sale and avoid the stress of temporary housing or rushed decisions.

Sam and Lily’s bridge loan gave them breathing room and control. They sold their condo three months later for $2.6 million which comfortably paid off the $1.5 million bridge loan and moved into their Noe Valley home.

Homeowners in similar situations often overlook how equity can work in their favor. If your home’s value exceeds $2 million and you’ve built substantial equity, a bridge loan can simplify the transition. Focus on working with a lender (like us) who understand the market with creative financing and can guide you through the process with confidence.

How Bridge Loans Work in Practice

Bridge loans are surprisingly straightforward. Think of them as a financial window of opportunity as they help equity-rich borrowers to buy another home while decreasing the pressure to sell your current one immediately.

Quick Overview:

  1. Collateral: Your current home serves as security for the loan. If your property is worth $2.5 million and you owe $500,000, you have $2 million in equity. The bridge lender will lend a maximum of 60–75% of that equity temporarily.
  2. Short-term: Most bridge loans last between six and twelve months giving you enough time to sell your old home and repay the loan.
  3. Flexible repayment: You can repay the loan in a lump sum after selling your property or through monthly interest payments in the interim.

Imagine you’ve found the perfect home in San Francisco for $4 million. You want to bring in $1 million for the down payment but the bulk of your cash is tied up in your current home, retirement accounts and RSUs. A bridge loan could tap into your equity much quicker than a home equity loan and cover that $1 million upfront. It puts you in a stronger position to make an offer.

One drawback to bridge loans is they aren’t cheap. They often come with higher interest rates and higher fees (2-3 points) than traditional mortgages or lines of credit but their convenience and speed make them a powerful tool.

The additional costs are nullified when timing is a big factor. The key is working with a lender who specializes in financing for high-net-worth clients and understands luxury real estate markets.

Alex’s Story: Moving to a Luxury Home in Orange County

A tech executive named Alex faced a familiar challenge that many equity-rich homeowners do. They wanted to move to nearby Newport Beach and had their heart set on a $5 million home in the prestigious Newport Coast area.

But their $3 million Irvine property hadn’t sold yet and they needed funds to act quickly in a market where homes are often snapped up within days. A bridge loan was the perfect solution and this is what happened.

Alex secured a $2 million bridge loan based on the equity in their Irvine home for his desired down payment and closing costs.  The loan enabled them to make an a very attractive offer with 40-percent down and decrease the risk of financing falling through. His offer beat out multiple buyers who had 20- and 30-percent down payments.

Alex and his family moved into their new home immediately knowing they had six months to finalize the sale of their Irvine property and an optional extension if necessary. Their Irvine home sold for $3.1 million a few months later giving them ample funds to pay off the $2 million bridge loan.

Benefits of Using a Bridge Loan in California’s Housing Market

Bridge loans are a smart choice for equity-rich homeowners in competitive markets like San Francisco and Orange County. These are just four reasons why:

  • Timing & flexibility: You don’t have to rush to sell your current home. Take the time to find the right buyer and maximize your sale price.
  • Competitive edge: When you make non-contingent cash offers or high down payment offers they are more appealing to sellers.
  • Avoid double moves: Skip the hassle and expense of moving into temporary housing and placing your belongings in storage by moving directly into your new home.
  • Use your equity strategically: Let your existing property work for you by tapping into its value to secure your next one.

How to Qualify for a Bridge Loan

Qualifying for a bridge loan is easier than you might think if your property has substantial equity over $1 million. Here’s what lenders typically look for:

  • Equity.  Ideally, you’ll need at least 50% equity in your current home.
  • Credit. A credit score of 700 or higher increases your chances of approval and may secure better terms.
  • Exit strategy. Lenders want confidence that your current home will sell within the loan’s term.
  • Debt ratios: Some lenders want you to be able to afford both payments while others  disregard your current house payment if it will be listed for sale before closing the bridge loan.

Preparation is key. Work with a mortgage expert who understands the nuances of short term real estate lending. They’ll help you calculate the maximum loan amount and explain all the costs involved such as origination, underwriting and appraisal fees to make your goal a reality.

If you’re not sure where to start reach out to a lender or mortgage broker who specializes in bridge loans for properties in the $2 million+ range. They’ll guide you through the process and ensure you feel confident every step of the way.

Conclusion: Empower Your Move with a Luxury Bridge Loan

A bridge loan can transform a stressful move into a seamless experience. Whether you’re buying in San Francisco, Orange County, or another competitive market, this 12-month loan gives you the flexibility to act quickly and strategically. Ready to take the next step? Reach out today to see how a bridge loan can work for your situation.

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