Thinking about buying your next home in Sacramento before you sell your current one? In competitive suburbs like Folsom, Roseville, and Elk Grove, a non-contingent offer can help you win the right home without waiting for your sale to close. At the same time, carrying two homes can feel risky. This guide breaks down bridge loans, HELOCs, and mortgage recasts so you can compare costs, timelines, and risks and decide with confidence. Let’s dive in.
What “buy before you sell” means
Buying before you sell lets you write a non-contingent offer on the new home while you prepare and list your current one. It removes the sale-of-home contingency that many sellers prefer to avoid. You get a more predictable move and can time your sale for top presentation.
The tradeoff is short-term financial complexity. You may carry two properties for a few months and pay higher financing costs. Understanding your options and underwriting rules helps you control risk.
Bridge loan basics
A bridge loan is a short-term loan that covers the gap between buying a new home and selling your current one. It is usually secured by your current home, the new home, or both. Terms typically run 6 to 12 months, sometimes up to 24 months.
Payments are often interest-only. Some lenders allow interest to accrue into the payoff when your current home sells. Expect lenders to review your combined loan-to-value (CLTV), debt-to-income (DTI), credit, and documentation of equity.
Pros include the ability to make a competitive non-contingent offer and a clear timeline. Cons include higher rates and fees than a standard mortgage, potential exit fees, and the risk of carrying two mortgages if your sale is delayed.
HELOC as a bridge
A home equity line of credit (HELOC) is a revolving line secured by your home. Many owners tap a HELOC for part of the new down payment or to cover costs while the current home is listed.
HELOCs usually have variable interest rates, a draw period of several years, and lower upfront costs than a refinance or many bridge loans. Payments during the draw period are often interest-only.
Pros include flexibility and lower upfront costs, especially if you already have a HELOC in place. Cons include rate volatility and the fact that an outstanding HELOC appears as debt, which can impact your DTI and new mortgage approval unless your lender makes a special allowance.
Mortgage recast: a cash-flow helper
A mortgage recast lets you apply a lump-sum principal payment to your existing mortgage and then re-amortize the loan to reduce your monthly payment. It keeps your original rate and terms. Many servicers offer recasts for a modest fee, but not all loans are eligible.
Recasting does not create cash for a new down payment. Instead, it lowers your current payment to help you carry two homes more comfortably, or it can be paired with other financing.
Pros include low cost and preservation of your current interest rate. Cons include tying up cash and limited availability based on servicer policy.
Costs to expect and compare
When you price out a buy-before-you-sell plan, make sure you compare the full picture, not just the interest rate.
- Interest costs. Bridge loans often price higher than primary mortgages. HELOC rates are variable and can rise over time.
- Fees and upfront costs. Origination, appraisal, title, and possible exit fees for bridge loans. HELOCs usually have lower setup costs.
- Ongoing carrying costs. Two mortgage payments, property taxes, insurance, utilities, HOA dues, and maintenance.
- Prepayment and exit costs. Payoff or reconveyance fees and any penalties.
- Opportunity cost. Equity locked up for months could have alternative uses.
Underwriting and approval factors
Lenders evaluate how your situation would perform if your current home takes longer to sell. Expect attention to these factors:
- Combined Loan-to-Value (CLTV). Lenders cap total exposure across your current mortgage, the bridge or HELOC, and the new mortgage.
- Appraisals. One or both properties may require appraisal(s). The presumed sale price of your current home matters.
- Debt-to-Income (DTI). Carrying two homes temporarily raises your DTI. Some lenders allow exceptions or require reserves for several months.
- Credit and payment history. Strong credit improves pricing and approval odds.
- Documentation of equity. Title, lien details, and any existing second liens or HELOCs are part of the review.
Sacramento market considerations
Local market speed shapes your strategy. Sacramento and its suburbs can move quickly in certain price points and locations, then stabilize. Equity-rich owners who bought earlier often have flexibility to use bridge options. If inventory is tight and days-on-market are low, a non-contingent offer may be worth the cost. If inventory builds, listing first can reduce risk.
Escrow timelines in California are commonly 30 to 45 days, but coordinating a buy-before-you-sell can require shorter or longer windows. Work with an escrow officer familiar with lien payoffs and bridge loan releases at recording.
Property taxes can change with a new purchase due to reassessment. Review implications with a tax professional. If either property is in an HOA, check any transfer rules or move-in windows that could affect your schedule.
Local banks, credit unions, and mortgage brokers in Sacramento offer a range of bridge and short-term products. Terms vary widely, so compare CLTV limits, required reserves, appraisal timelines, and any exit fees across multiple lenders.
Example: comparing costs and timelines
Below is a simplified, hypothetical comparison to show how the math can work. Actual lender quotes will vary based on CLTV, credit, appraisals, and your reserves.
Assumptions:
- Current home value: 600,000 dollars; remaining mortgage: 200,000 dollars.
- New home price: 700,000 dollars with 20 percent down; you need 100,000 dollars total for down payment and reserves.
- You expect to sell in 3 to 6 months but want to see a 12-month worst case.
Scenario A: Bridge loan
- Amount: 100,000 dollars
- Rate: 7 percent annual (illustrative)
- Fees: about 3,000 dollars
- Estimated 6-month cost: about 3,500 dollars interest plus fees ≈ 6,500 dollars
- Estimated 12-month cost: about 7,000 dollars interest plus fees ≈ 10,000 dollars
Scenario B: HELOC
- Amount used: 100,000 dollars
- Rate: 6 percent variable start (illustrative)
- Fees: about 1,000 dollars
- Estimated 6-month cost: about 3,000 dollars interest plus fees ≈ 4,000 dollars
- Estimated 12-month cost: about 6,000 dollars interest plus fees ≈ 7,000 dollars
Scenario C: Mortgage recast
- Lump sum to current loan: 100,000 dollars
- Recast fee: typically a few hundred dollars
- Effect: lowers current payment to help carry two homes
- Cost: no interest expense on new borrowing, but you give up liquidity and flexibility
Quick side-by-side
| Option | 6-month est. total | 12-month est. total | Key notes |
|---|---|---|---|
| Bridge loan | ~6,500 dollars | ~10,000 dollars | Purpose-built for timing gaps; higher fees and rates |
| HELOC | ~4,000 dollars | ~7,000 dollars | Lower upfront costs; variable rate may rise; counts toward DTI |
| Recast | Low fee | Low fee | Reduces payment only; does not create cash |
These figures are illustrative. Use live quotes and your actual timeline to refine the comparison.
If your sale takes 6 to 12 months
Build a conservative plan. Double-check the total carrying cost of two homes for 6 to 12 months. Include mortgage payments, taxes, insurance, utilities, HOA dues, maintenance, and the interest and fees above. Ask each lender to model three timelines: 3 months, 6 months, and 12 months.
If market conditions shift or pricing expectations change, your realized equity may be lower than expected. Know your extension options and any penalties well before you commit.
Step-by-step plan for Sacramento homeowners
Use this checklist to prepare a strong, low-stress buy-before-you-sell move:
- Get a current value estimate of your home via a comparative market analysis or appraisal.
- Secure a pre-approval for the new mortgage and request bridge and HELOC quotes from at least two sources, including a local credit union or community bank.
- Ask lenders about CLTV limits, required reserves, how they treat HELOCs or bridge loans in DTI, appraisal timing and costs, and any exit or extension fees.
- Run a worst-case 6 to 12 month double-carry budget that includes all property expenses.
- Coordinate offer terms with your agent. For a non-contingent offer, prepare proof of funds or bridge approval and discuss any fallback protections.
- Loop in title and escrow early to plan lien releases and payoffs at closing.
- Confirm recast eligibility with your servicer if you plan to reduce your current payment after selling.
When each option fits best
- Choose a bridge loan if you want purpose-built financing for a non-contingent offer and can tolerate higher short-term costs for speed and certainty.
- Choose a HELOC if you value flexibility and lower upfront costs, and your lender can accommodate DTI while you carry both properties.
- Choose a recast if your priority is reducing your current payment to make a temporary double-carry workable, and you already have cash for the new down payment.
Get local guidance that aligns financing and timing
Every situation is different, and local conditions across Sacramento, Folsom, Roseville, and nearby suburbs can shift. You deserve advice that blends financing know-how with on-the-ground market insight and a plan to prep and sell your current home quickly.
If you are considering a non-contingent purchase, let’s talk through your numbers, lender options, and a prep plan that shortens time on market. Connect with Melissa Lamberti to map your buy-before-you-sell strategy and request your free home valuation.
FAQs
How do bridge loans work when buying in Sacramento?
- A bridge loan is a short-term loan secured by your current home, the new home, or both. It covers your down payment or purchase funds until your current home sells, usually within 6 to 12 months.
Will a HELOC hurt my approval for the new mortgage?
- It can. Many lenders count HELOC payments in your DTI. Ask your lender how they treat HELOCs during underwriting and whether any temporary exceptions apply.
Is a mortgage recast the same as a refinance?
- No. A recast keeps your existing loan and interest rate. You make a lump-sum principal payment, and the lender recalculates your payment on the lower balance for a small fee.
What are the biggest risks of buying before selling?
- The main risks are double-carry costs if your home takes longer to sell, interest rate changes on variable products like HELOCs, and a lower-than-expected sale price that reduces your usable equity.
How long does a bridge loan or HELOC take to set up in Sacramento?
- HELOCs can be faster if already in place. Bridge loans usually take a few weeks due to appraisals and title work. Timelines vary by lender and market conditions.
What should I ask lenders before choosing a bridge option?
- Ask about CLTV limits, required reserves, how they treat two mortgages in DTI, appraisal requirements, total fees, and any extension or exit costs.
