Buyer's Guide • July 17, 2026

What is a bridge loan?

by Matthew Tanzer

A bridge loan is short-term financing that helps you access equity in your current home to buy your next one before selling.

How does it work?

It uses your current home’s equity to fund the down payment on your next purchase.

When is it useful?

When you want to buy before selling but need your equity to do it.

What are the costs?

Higher interest rates and fees compared to standard loans.

What are the risks?

If your current home does not sell quickly, you carry additional debt.

Are there alternatives?

Home equity lines of credit or selling first

Buyer's Guide • July 17, 2026

Can I buy before I sell my current home?

by Matthew Tanzer

Yes, but it depends on your finances and risk tolerance. Carrying two homes, even temporarily, requires planning.

What are my options?

Buy first, sell first, or try to coordinate both.

What are the risks of buying first?

You may carry two mortgages if your current home does not sell quickly.

What are the risks of selling first?

You may need temporary housing if you do not find a replacement in time.

Can I make an offer contingent on selling?

Yes, but it weakens your offer in competitive situations.

What helps make this work?

Strong finances, access to bridge options, and a clear plan.

Buyer's Guide • July 17, 2026

What monthly costs should I budget for beyond the mortgage?

by Matthew Tanzer

Your mortgage is only part of the total cost of ownership. On the Peninsula, ongoing maintenance and environmental exposure add to the picture.

What are the main additional costs?

Property taxes, insurance, utilities, and maintenance.

How much should I budget for maintenance?

A common guideline is 1% of home value annually, but older homes may require more.

What about insurance?

Costs vary based on location, fire risk, and property condition.

Are utilities higher near the coast?

They can be, especially with older systems and exposure to moisture and wind.

What about HOA costs?

If applicable, include dues and any special assessments.

Buyer's Guide • July 17, 2026

How do I compare loan offers?

by Matthew Tanzer

Loan offers vary in rate, fees, structure, and flexibility. The lowest rate is not always the best overall deal.

What should I compare first?

The interest rate and annual percentage rate (APR), which includes certain fees.

What fees matter most?

Lender fees, points, and closing costs.

Should I look at monthly payment?

Yes, but also understand long-term cost and flexibility.

Do lender reputations matter?

Yes. Execution, communication, and reliability can affect your closing.

What is the best way to compare?

Use standardized loan estimates and review them side by side.

Buyer's Guide • July 17, 2026

How do self-employed buyers qualify?

by Matthew Tanzer

Self-employed buyers face more detailed income verification. Lenders focus on consistent, documented income over time rather than recent earnings alone.

What income do lenders use?

Typically a two-year average of net income from tax returns.

Do write-offs affect qualification?

Yes. Lower reported income can reduce your borrowing capacity.

What documents are required?

Full tax returns, profit and loss statements, and sometimes CPA letters.

Are there stricter standards?

Often yes, especially for jumbo loans common in this area.

How can I prepare?

Keep clean financial records and avoid major changes before applying.

Buyer's Guide • July 17, 2026

What documents will a lender ask for?

by Matthew Tanzer

Lenders verify your income, assets, and financial stability in detail. Being organized upfront helps avoid delays during escrow.

What income documents are required?

Pay stubs, W-2s, or tax returns depending on your employment type.

What asset documents are needed?

\Bank statements, investment accounts, and proof of funds for down payment and reserves.

What about credit and debts?

Lenders review your credit report and may ask for explanations of certain items.

Will they verify employment?

Yes, both early and right before closing.

Why do they ask for updates during escrow?

They need current information to finalize approval, especially if timelines extend.

Buyer's Guide • July 17, 2026

What is a rate lock?

by Matthew Tanzer

A rate lock secures your interest rate for a set period during your transaction, protecting you from market changes while you are in escrow.

When should I lock my rate?

Usually after you are in contract, but timing depends on market conditions and lender advice.

How long does a rate lock last?

Commonly 15, 30, or 45 days, aligned with your closing timeline.

What happens if my lock expires?

You may need to extend it, often at a cost, or accept the current market rate.

Can I change my rate after locking?

Some lenders offer a float-down option if rates improve, but not all.

Does locking guarantee my loan?

No. It only locks the rate, not the full approval.

Buyer's Guide • July 17, 2026

How do rate changes affect buying power?

by Matthew Tanzer

Interest rates directly affect your monthly payment and therefore how much you can afford. Even small changes can shift your price range significantly.

Why do rates matter so much?

Higher rates increase monthly payments, reducing your maximum loan amount.

How much difference does a rate change make?

A 1% increase can reduce buying power by roughly 10% or more, depending on the scenario.

Do rates affect all buyers equally?

No. Buyers near their maximum budget feel the impact most.

Should I wait for rates to drop?

That depends. Prices, competition, and your timing matter just as much as rates.

Can I refinance later?

Yes, if rates improve and your financial situation supports it.

Buyer's Guide • July 17, 2026

What is mortgage insurance?

by Matthew Tanzer

Mortgage insurance protects the lender, not the buyer, if you default. It is usually required when your down payment is below 20% on conventional loans or on most FHA loans.

When is mortgage insurance required?

Typically when you put less than 20% down on a conventional loan, or with most FHA loans regardless of down payment.

How much does it cost?

It varies based on loan type, credit score, and down payment. It is usually a monthly cost added to your payment.

Can it be removed?

For conventional loans, yes, once you reach enough equity. FHA loans often require refinancing to remove it.

Does it affect buying power?

Yes. It increases your monthly payment and reduces what you can afford.

Is it always a bad thing?

No. It allows buyers to enter the market sooner with less cash.

Buyer's Guide • July 17, 2026

What loan types should I know about?

by Matthew Tanzer

Loan type affects your rate, down payment, appraisal standards, and how competitive your offer looks. On the Monterey Peninsula, where older homes and condition issues are common, some loan types can limit what you can buy or how clean your offer is.

What are the main loan types?

Conventional, FHA, VA, and jumbo loans. Jumbo loans are common here due to higher price points.

What is a conventional loan?

A standard loan not backed by the government. It usually requires stronger credit and offers more flexibility in competitive situations.

What is an FHA loan?

A government-backed loan with lower down payment requirements, but stricter property condition standards and mortgage insurance.

What is a VA loan?

A loan for eligible veterans with no down payment and no mortgage insurance, but specific appraisal and condition requirements.

What is a jumbo loan?

A loan above conforming limits. It often requires strong financials, larger reserves, and more documentation.

Coldwell Banker - Monterey

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