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Message
Paying for new home construction
Posted on 8/25/13 at 7:57 pm
Posted on 8/25/13 at 7:57 pm
We are unsure how to proceed with funding our new home construction. In the permitting phase now and should begin construction after the first of the year.
Background:
* we own our current home, mortgage-free
* purchased the lot for new home in 2009 with 25% down but with the decline in real estate values (Washington state), we have very little equity.
* new home plus land will be valued close to seven figures
* with home construction savings and sale of current home, we should have approximately 75% available for new home but will need a mortgage for the remainder (not a pleasant thought after all these years)
* new home should be completed summer 2014, but we do not plan to move in until summer 2015 (new home will be our vacation spot for a while)
Options
* use home savings to cover approx. 30% of house/land cost. Take out mortgage on remaining 70%. Sell current home in 12-24 months, refinance new home loan with additional principal. Loan rates will undoubtedly be higher when loan refinanced.
* take out a mortgage on current home, apply the loan to new home purchase. Sell current home, pay off the mortgage and the surplus (assume can only mortgage 70-75% of value) placed in secure savings account to apply to mortgage of new home or, if rates are ok, refinance with residual proceeds from current home.
* sell current home now, rent for a couple of years and apply proceeds immediately to new home finance package.
thoughts?
Background:
* we own our current home, mortgage-free
* purchased the lot for new home in 2009 with 25% down but with the decline in real estate values (Washington state), we have very little equity.
* new home plus land will be valued close to seven figures
* with home construction savings and sale of current home, we should have approximately 75% available for new home but will need a mortgage for the remainder (not a pleasant thought after all these years)
* new home should be completed summer 2014, but we do not plan to move in until summer 2015 (new home will be our vacation spot for a while)
Options
* use home savings to cover approx. 30% of house/land cost. Take out mortgage on remaining 70%. Sell current home in 12-24 months, refinance new home loan with additional principal. Loan rates will undoubtedly be higher when loan refinanced.
* take out a mortgage on current home, apply the loan to new home purchase. Sell current home, pay off the mortgage and the surplus (assume can only mortgage 70-75% of value) placed in secure savings account to apply to mortgage of new home or, if rates are ok, refinance with residual proceeds from current home.
* sell current home now, rent for a couple of years and apply proceeds immediately to new home finance package.
thoughts?
Posted on 8/26/13 at 6:45 am to islandtiger
Sell now and rent
A bird in the hand as they say.
A bird in the hand as they say.
Posted on 8/26/13 at 6:49 am to islandtiger
What's current home worth, how many miles away from new home?
Posted on 8/26/13 at 7:46 am to MoreOrLes
quote:
Sell now and rent
A bird in the hand as they say.
Posted on 8/26/13 at 8:21 am to Bubba Bexley
Pay yourself.
This.
quote:
Sell now and rent A bird in the hand as they say.
This.
Posted on 8/26/13 at 8:57 am to fishfighter
I disagree about renting. He's two years away from this being primary residence, and currently has no mortgage. I'd sit at least until 30-60 days out from completion of new home.
Posted on 8/26/13 at 1:01 pm to ItNeverRains
quote:
What's current home worth, how many miles away from new home?
approx. $325,000; 2,000 miles (BR vs. Washington)
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