Scenarios

A bridge loan is a short-term financing option that provides temporary cash flow to cover gaps—commonly in business while awaiting long-term funding, or in real estate to bridge the time between buying and selling a home.

The primary requirement for a bridge loan is the equity in the departing home. Thus, most existing homeowners with considerable equity in their home are eligible for a bridge loan.

The primary benefits are: the opportunity to make a contingency-free offer on a new home, close on the new purchase in a timely manner, move to the new home without being rushed out of the old home, fixing up the old home for sale without being in the home, and selling the old home quickly and for top dollar after it is vacant and properly staged.

If you are an existing homeowner with sufficient equity, you decide you want/need to move, and you don’t want to have to sell first… you need a bridge loan.

The primary drawback of bridge loans is the cost. With less expensive Conventional loans the lender doesn’t begin “making money” until the 5th or 6th month and then continues to make money for many months and years into the future. Because most bridge loans pay off within 1-3 months the lender of the financing will charge a higher rate and fee for the financing.

Costs will vary from lender to lender and will be determined by the credit scores of the borrower, the loan-to-value against the properties, and other qualifying factors. The costs will typically range from 2-3% of the financed amount.

Yes, bridge loans that meet specific criteria are covered under the Real Estate Settlement Procedures Act (RESPA), which requires lenders to clearly disclose loan terms, closing costs, and any affiliated service providers to ensure transparency throughout the loan process.

Bridge loans typically offer faster approval and funding than traditional mortgages, often closing within a few weeks, though the exact timeline depends on factors like the lender’s efficiency, the borrower’s financial profile, property appraisals, and required documentation—with some lenders providing expedited processing for well-qualified borrowers.

In most cases, no, a bridge loan may not require an appraisal. This is because the most efficient bridge lenders will determine valuations using automated valuation methods and because the loan-to-value is so low that the risk to the lender is minimized.

The next step is to call or email me, Todd Galde, to have a Confidential Strategy Session where we discuss where you want to move, how much equity you have to work with, and ultimately to obtain a pre-approval so you can begin looking for your next home. You can text or call me at 925-381-8190, email me at [email protected], or book a “Confidential Strategy Session” on my calendar here: http://galde.co/css