In Hancock Park, the right home rarely waits. If you want to trade up but need equity from your current home, timing can feel like the biggest roadblock. Bridge financing can help you buy first and sell second, but it is not the only path. In this guide, you will learn how bridge loans work, what they cost, key risks, and smart alternatives so you can move with confidence. Let’s dive in.

Bridge loan basics

A bridge loan is short-term financing that lets you access the equity in your current home to purchase a new one before you sell. It exists to help you write a stronger, non-contingent offer in a competitive market like Hancock Park. You typically repay the bridge when your current home sells or when you finalize your new long-term mortgage. For a plain-English overview, see the background on bridge financing from Investopedia.

How a bridge loan works

Bridge loans usually run for about 6 to 12 months. Many require interest-only payments with a balloon payoff when your old home closes or you refinance into permanent financing, a structure outlined in LendingTree’s consumer guide. Rates are typically higher than conventional mortgages, and you will see origination points and closing costs. For cost ranges and examples of fees, review Forbes Advisor’s breakdown of bridge loan costs.

When it fits in Hancock Park

Hancock Park often rewards clean, non-contingent offers. If you need to unlock equity to be competitive on a unique property, a bridge can give you the speed and certainty to move first. Because homes here are high-value and less uniform, appraisal timing and comps matter more than average. Plan for appraisal risk and give yourself a realistic runway to sell your departing home.

Costs to expect

Every lender and program differs, but most bridge loans include several cost layers:

• Interest charges at a higher rate than standard mortgages, often interest-only.
• Origination points, commonly 1 to 3 percent of the bridge amount, plus closing costs such as appraisal, title, and escrow. See consumer cost components summarized by Forbes Advisor and LendingTree.
• Program fees for buy-before-you-sell services if you choose that route. Many providers charge separate program fees, as outlined in HomeLight’s comparison of buy-before options.
• Carry costs during overlap, including any interest on the bridge plus your existing mortgage. For a practical look at overlap considerations, see Homeowner.com’s guide.

Key risks to weigh

• Overlap risk: if your current home takes longer to sell, you could carry two mortgages plus bridge interest. Homeowner.com highlights this cash-flow pressure.
• Appraisal shortfall: if the appraisal comes in low, you may qualify for a smaller advance or face added conditions. See common underwriting requirements in NASB’s bridge loan overview.
• Extension costs: needing more time can mean extension fees or higher accrued interest. Review typical loan attributes and extension considerations in OfferMarket’s lender guidelines.

A quick example with local-scale numbers

The following is hypothetical and for illustration only. Always run your exact figures with your lender.

• Assume your current home appraises at $4,100,000 and your outstanding mortgage is $1,000,000.
• If a lender allows up to 75 percent combined loan-to-value on a bridge, the maximum combined debt would be about $3,075,000. Subtract your existing loan to estimate roughly $2,075,000 of potential bridge proceeds, subject to underwriting and documentation. Programs with up to this CLTV exist, as noted by Westpark’s product overview.
• If you draw $500,000, pay 2 percent in origination, and carry the loan for six months at a rate higher than a standard mortgage, your total cost will likely be in the tens of thousands. For structure and cost factors to plug into your own model, see LendingTree’s guide.

Alternatives to compare

HELOC or home equity loan

• Pros: Often lower cost, especially if you qualify with a relationship bank. Flexible draws with a HELOC. See basics in Investopedia’s overview.
• Cons: Variable rates on HELOCs and potential impact on combined LTV for your next mortgage. For tax years 2018 to 2025, interest on home equity debt is deductible only if proceeds are used to buy, build, or substantially improve the secured home. See current IRS guidance on deductibility here.

Sell first with a contingency

• Pros: Avoids bridge costs and overlapping payments.
• Cons: In competitive situations, contingent offers are often less attractive. You may need temporary housing or a rent-back to align timelines.

Buy-before-you-sell programs

• How they work: Companies can help you make a non-contingent offer and coordinate the sale of your current home. They charge program fees and may offer a backup purchase guarantee if your home does not sell within a set window. See a comparison of common models in HomeLight’s overview.
• Tradeoffs: Convenience and speed in exchange for added fees and program rules. Confirm geographic availability and total costs.

Other tactical options

• Negotiate a rent-back from your buyer.
• Arrange a longer closing timeline.
• Use short-term housing to sell first and reduce risk.

Quick decision guide

• Need a non-contingent offer and have strong equity: consider a bridge or a buy-before-you-sell program.
• Rate-sensitive and cost-focused with time to spare: compare a HELOC or sell first.
• Limited equity or tight cash flow: selling first or negotiating a rent-back can reduce risk.
• Unique or premium property with competition: prioritize options that remove contingencies quickly.

Your next steps

• Confirm your equity and pricing: get a current valuation and a lender-ready appraisal estimate.
• Ask multiple lenders for written quotes: request APR, points, fees, term, and any extension or prepayment details. See typical underwriting items in NASB’s bridge overview.
• Compare total costs across options: bridge vs HELOC vs buy-before programs. Include fees, interest, and carry costs. Use the structures outlined in LendingTree’s guide.
• Check tax treatment with your CPA: review IRS rules on interest deductibility here.
• Model worst-case timelines: plan for a 6-month sale window, a lower-than-expected appraisal, and rate changes.

Work with a local partner

You do not have to navigate this alone. Our team coordinates bridge financing options, including Compass Bridge Loan Services, and manages the buy-sell timeline so you can focus on the home that fits your next chapter. For a private, no-pressure consultation and a side-by-side cost plan tailored to Hancock Park, reach out to Rebecca Davis.

FAQs

Will a bridge loan help me make a non-contingent offer in Hancock Park?

• Yes, that is the main advantage, but it comes with higher financing costs and requires lender approval and sufficient equity, as outlined in LendingTree’s consumer guide.

How much equity do I need for a bridge loan?

• Many lenders expect substantial equity, often at least 20 to 35 percent available, and some programs allow up to about 75 percent combined LTV, per NASB’s overview.

Are bridge loan interest payments tax deductible?

• Tax treatment depends on how you use the funds and the tax year; see IRS guidance stating deductibility for home equity interest when used to buy, build, or substantially improve the secured home for 2018 to 2025 here.

What if my current home does not sell before the bridge loan matures?

• You remain responsible for repayment, and options may include an extension at added cost, adjusting price to sell faster, or using a buy-before program’s backup purchase if available, as described in LendingTree’s guide.

How do buy-before-you-sell programs compare to a traditional bridge?

• They are alternatives with different tradeoffs, often adding program fees and operational support; compare total costs, timelines, and availability using HomeLight’s comparison.