Are you torn between using a bridge loan or making your next offer contingent on selling your current home? You are not alone. Many Los Molinos homeowners want to move without juggling two homes or losing the one they love. In this guide, you will learn how each path works, how local market conditions in Tehama County affect your odds, and what steps help you make a confident decision. Let’s dive in.
Bridge loan basics
A bridge loan is a short-term loan that helps you buy before you sell. It fills the cash flow gap so you can make a stronger, non-contingent offer on your next home. Terms are commonly 6 to 12 months, sometimes up to 24 months, and payments are often interest-only during the term.
Lenders underwrite bridge loans using your debt-to-income ratio, credit, cash reserves, and the value of the property used as collateral. Many lenders cap the loan-to-value at about 70 to 80 percent. You repay the principal when your current home closes or at the end of the term.
You can secure a bridge loan against your current home or, in some cases, the new one. Lenders may structure it as a second mortgage, a HELOC, or a short-term interim product. Fees can include origination, appraisal, title insurance, and higher closing costs, and there may be prepayment penalties.
When a bridge loan helps
- You want to make a non-contingent, competitive offer.
- You need funds for a down payment or closing before your current home sells.
- You want flexibility in timing so you can move once, not twice.
Bridge loan risks and how to reduce them
- Higher cost than a standard mortgage and the possibility of carrying two homes at once. Build a cash cushion sized for several months of payments and utilities.
- Underwriting is stricter. Get lender feedback early on rates, fees, LTV, and exit requirements.
- If your home does not sell within the term, you may face renewal fees or pressure to sell. Price and stage your home for a quick sale and have a clear exit plan.
Contingent sale basics
A contingent offer means your purchase becomes binding only if your current home sells under specific terms. A typical contingency includes a time window, usually measured in days, and may require that your current home be listed and actively marketed at an appropriate price.
Variations include a “kick-out” clause. With a kick-out, the seller can keep marketing the home and, if another offer comes, give you a short window, often 48 to 72 hours, to remove your contingency. You can also set the contingency on receiving proceeds or on closing, which changes your risk and timing.
Your inspection, appraisal, and financing contingencies are still separate items to manage. Your lender will need to see how your down payment and closing funds will materialize when your sale closes.
When a contingent offer helps
- You want to avoid short-term loan costs and carrying two homes.
- Your current home is likely to sell within your contingency window.
- The market is balanced or slower, and sellers are open to reasonable contingencies.
Contingent offer risks and how to reduce them
- Less competitive in low-inventory or fast markets. Improve your terms with a clean offer, realistic pricing, and shorter timelines you are comfortable meeting.
- A kick-out clause can force a quick decision. Agree to clear response times and stay prepared with backup options.
- Timing mismatches can create a gap between closings. Have a plan for temporary housing, storage, or flexible possession.
Los Molinos market factors to weigh
Los Molinos and greater Tehama County typically see smaller inventory and lower transaction volume than large metro areas. Some listings can sit longer, while certain price bands can be thin. The buyer pool is often local, with some influence from nearby job centers like Red Bluff and Chico. Seasonality matters, with activity tied to the school year and weather.
What this means for you:
- In a sellers’ market with low inventory and multiple offers, contingent offers are harder to win. A bridge loan or other non-contingent funds can help you compete.
- In a balanced or buyer’s market, contingencies are more commonly accepted. You may prefer a contingent path to avoid bridge costs.
- Before deciding, confirm local indicators like months of inventory, average days on market, and how often kick-out clauses appear. Your agent can pull current MLS data and recent outcomes in Los Molinos.
Costs and tradeoffs to expect
A bridge loan can increase carrying costs. You might pay interest on the bridge, possibly a mortgage on your current home, and expenses like taxes, insurance, and utilities on two properties for a period of time. A contingent offer avoids short-term loan costs, but it can be less competitive and may extend your timeline or force interim housing.
Use this quick worksheet to compare your options. Plug in your own numbers with a local lender’s estimates.
- Current mortgage, taxes, insurance per month: $_____
- Bridge loan interest-only payment per month: $_____
- Utilities and maintenance for both homes per month: $_____
- Estimated bridge fees and closing costs: $_____
- Potential temporary housing and storage: $_____
- Risk cost of losing target home or paying more to win later: notes _____
Tip: Ask your lender to run a scenario for a 6 to 12 month hold, then test a slower sale timeline. Include appraisal risk and how your down payment changes if values shift.
Which path fits your situation
Consider leaning toward a bridge loan if:
- You found a hard-to-replace property in a low-inventory pocket.
- You can qualify with conservative LTV limits and maintain a 3 to 6 month cash buffer.
- You prefer one move and want maximum offer strength.
Consider a contingent offer if:
- The Los Molinos market is balanced and your home should sell within 30 to 45 days.
- You want to avoid short-term borrowing costs.
- You are comfortable with a kick-out clause and a realistic contingency window.
How to strengthen your plan
If you use a bridge loan:
- Confirm underwriting, LTV, fees, and exit requirements upfront. Get preapproval for the new mortgage and feasibility for the bridge.
- Prepare your current home for a fast sale. Price accurately, complete pre-listing repairs, and use quality photos and targeted marketing.
- Maintain reserves to carry both homes for several months.
If you make a contingent offer:
- Shorten contingency periods only if you can comfortably meet them. Consider a higher earnest deposit to balance your ask.
- Agree to a clear kick-out response window, commonly 48 to 72 hours, and keep documents and decisions ready.
- Create a backup plan. Identify temporary rental options, storage, or flexible closing and possession strategies.
Simple Los Molinos scenarios
Scenario A: You spot a well-priced property with multiple showings on day one. Inventory is tight in that price range. A bridge loan or other non-contingent funds likely increases your chance of acceptance. Validate costs against the value of winning the home and confirm your exit plan.
Scenario B: The market is balanced and your agent’s MLS data shows your home type typically goes pending in about one month. A contingent offer with a reasonable kick-out clause may be cost-efficient. Keep contingency periods tight and actively market your current home to limit exposure.
Next steps for Tehama County buyers
- Get preapproved for your new mortgage and request a bridge loan feasibility review with a local lender.
- Ask your agent for current Los Molinos MLS data on days on market, months of inventory, and recent contingent outcomes.
- Price and stage your current home for speed and certainty.
- Discuss standard contingency language, kick-out clauses, and escrow timelines so you understand each step.
- Map your dates. Coordinate listing, contingency windows, funding, and closing so the pieces work together.
If you want a clear plan tailored to Los Molinos and greater Tehama County, connect with a local team that handles both in-town homes and rural properties. Reach out to Lori Slade for a quick strategy call and a step-by-step timeline that matches your goals.
FAQs
What is a bridge loan and how long does it last?
- A bridge loan is short-term financing that helps you buy before you sell, commonly for 6 to 12 months, often with interest-only payments and repayment when your current home closes.
How does a sale contingency work in Los Molinos?
- Your purchase is conditional on selling your current home within a set window, with terms that may include active marketing, a kick-out clause giving you 48 to 72 hours to respond, and clear deadlines.
When is a bridge loan stronger than a contingent offer?
- In low-inventory or fast markets, non-contingent offers are usually more competitive, so a bridge loan can improve acceptance odds if you qualify and can carry the short-term cost.
What are typical costs of a bridge loan?
- Expect higher interest than a standard mortgage, plus fees like origination, appraisal, and title, along with the risk of carrying two homes until your sale closes.
Can a lender approve my purchase if I need sale proceeds for the down payment?
- Some lenders will underwrite your purchase conditioned on your sale contract, but final funding usually waits for your home to close, which requires careful timing for title and escrow.
What is a kick-out clause and why does it matter?
- It lets the seller continue marketing the home and, if another offer appears, gives you a short window, commonly 48 to 72 hours, to remove your contingency or step aside.
What are alternatives to a bridge loan?
- Depending on your finances and lender options, you might consider a HELOC or home equity loan, seller financing, a personal line of credit, or using savings, each with its own underwriting and rate profile.
