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Building a new house while living in your existing house
Posted on 3/3/20 at 1:22 pm
Posted on 3/3/20 at 1:22 pm
Has anyone built a house while living in the prior house? I'm curious about how, generally, the construction loan process works when, ultimately, a large portion of the purchase price will be paid for with the funds from the sale of the existing house (in which you're still living).
Thanks. Sorry in advance if this belongs on the money board.
Thanks. Sorry in advance if this belongs on the money board.
20
Posted on 3/3/20 at 1:24 pm to Zachary
Do you have a plan for the scenario of your current home not selling when the new one is completed?
Posted on 3/3/20 at 1:24 pm to Zachary
quote:
Has anyone built a house while living in the prior house?
nope...you're the first person to dream up such a dastardly scheme
most people sell their current home and then live in a tent on the construction site while their new home is being built
This post was edited on 3/3/20 at 1:25 pm
Posted on 3/3/20 at 1:24 pm to Zachary
Some banks will give a “bridge loan” for this.
Posted on 3/3/20 at 1:25 pm to Zachary
quote:
Has anyone built a house while living in the prior house?
No, but I was fricking my new wife while I was still married to my old one. So I assume it goes something like that.
Posted on 3/3/20 at 1:26 pm to 4LSU2
No. Current home is in a good market, but, of course, you never know.
Posted on 3/3/20 at 1:32 pm to Zachary
It's like having two kids. If you can't sell the one you like the least, you just set it on fire and walk away.
Posted on 3/3/20 at 1:43 pm to Zachary
Going thru it right now. Construction loan for new house. You still need 20% cash or have to own the new property. I had already bought the property. The bank sets a draw schedule and you request draws as needed. Poured slab December 10th and cabinets start tomorrow. We put our house on the market 2 weeks ago and sold it in 2 days for asking price. New house will not be ready when we have to get out. Bought a travel trailer last weekend.
Do not start work on the new house until the construction Loan closes.
Do not start work on the new house until the construction Loan closes.
Posted on 3/3/20 at 1:43 pm to Zachary
Jeez- tough crowd.
Secure a construction loan.
Pay interest only on the draws you make during the construction period.
Keep paying your mortgage- this is a completely separate financial instrument.
When house is complete, construction loan is turned into your new mortgage.
Presumably, you will have a contract on your old house, you move out- new owners move in and you get your equity out of it.
If not, the bank will give you a bridge loan.
ETA.....make sure you are very solvent before getting into this- the house WILL cost more than you originally expected, and it WILL likely not appraise for what it cost to build. That difference is on YOU in addition to the 20% down.
Also- you WILL NOT finance at a low interest loan for any mortage amount over $417,000- then you get into jumbo loan territory and the rates are much higher.
Secure a construction loan.
Pay interest only on the draws you make during the construction period.
Keep paying your mortgage- this is a completely separate financial instrument.
When house is complete, construction loan is turned into your new mortgage.
Presumably, you will have a contract on your old house, you move out- new owners move in and you get your equity out of it.
If not, the bank will give you a bridge loan.
ETA.....make sure you are very solvent before getting into this- the house WILL cost more than you originally expected, and it WILL likely not appraise for what it cost to build. That difference is on YOU in addition to the 20% down.
Also- you WILL NOT finance at a low interest loan for any mortage amount over $417,000- then you get into jumbo loan territory and the rates are much higher.
This post was edited on 3/3/20 at 1:48 pm
Posted on 3/3/20 at 2:02 pm to Zachary
I’m doing it currently but I saved a bunch of money so I can pay 25% for the down payment without selling my current house.
Once my old home sells I plan on doing a recast and putting half of the equity on the principal of the new house so I’m only financing around 50 to 55% of the cost of the house.
Once my old home sells I plan on doing a recast and putting half of the equity on the principal of the new house so I’m only financing around 50 to 55% of the cost of the house.
Posted on 3/3/20 at 2:08 pm to Zachary
I did it, but I'll be damn if I can remember. It was back in 1994. I did get a construction loan while I was still paying the mortgage on the first house. I had a commitment from the permanent lender, so if I did not sell my first house I would have been paying on two houses.
Here's the difference, though. I was able to get 100% financing on the second house costs, because I was the GC, and I did the electrical, plumbing, insulation, alarm system and painting. I guess I had enough sweat equity in the house that I did not need the 10% down requirement of that time.
Here's the difference, though. I was able to get 100% financing on the second house costs, because I was the GC, and I did the electrical, plumbing, insulation, alarm system and painting. I guess I had enough sweat equity in the house that I did not need the 10% down requirement of that time.
Posted on 3/3/20 at 2:09 pm to Zachary
Go find a new subdivision with a builder that will pay for the construction. Do a contract, put some money down, and when the house is complete, buy it then.
Posted on 3/3/20 at 2:16 pm to Zachary
I did.
I started building my home in February of last year. It was completed in July.
I put my old house on the market in May. Had an asking price offer in two weeks.
Negotiated a two week lease back from the buyers so I didn’t have a gap from the closing of my prior house at the end of June and closing of my new house two weeks later.
If your house doesn’t sell just use a bridge loan. My plan was to ask my dad for a loan for the down payment for my new one then pay him back after my old house sold but I never had to do that.
I started building my home in February of last year. It was completed in July.
I put my old house on the market in May. Had an asking price offer in two weeks.
Negotiated a two week lease back from the buyers so I didn’t have a gap from the closing of my prior house at the end of June and closing of my new house two weeks later.
If your house doesn’t sell just use a bridge loan. My plan was to ask my dad for a loan for the down payment for my new one then pay him back after my old house sold but I never had to do that.
This post was edited on 3/3/20 at 2:18 pm
Posted on 3/3/20 at 2:19 pm to Zachary
I've done it, but I kept my existing house. When the new house was finished I rented the house I was living in.
Posted on 3/3/20 at 2:37 pm to eScott
i’m doing this while renovating my new house using a HELOC for current house and putting that into the new house
Posted on 3/3/20 at 2:57 pm to Zachary
This thread is extremely out of place on the OT. Not because it’s a money talk thread, but because all the OT baws claim to pay cash for their real estate
Posted on 3/3/20 at 2:58 pm to Zachary
I'm doing it now for the 2nd time. The first time I carried the construction loan, this time my builder is.
And yes, the worst part is timing the sale of your home, and the closing of your new home, and of course the 3rd party buying your home likely needing to sell and close on their home as part of it.
And yes, the worst part is timing the sale of your home, and the closing of your new home, and of course the 3rd party buying your home likely needing to sell and close on their home as part of it.
Posted on 3/3/20 at 3:02 pm to Rize
quote:
I’m doing it currently but I saved a bunch of money so I can pay 25% for the down payment without selling my current house.
Once my old home sells I plan on doing a recast and putting half of the equity on the principal of the new house so I’m only financing around 50 to 55% of the cost of the house.
Why not take that equity and mutual fund it and generate avg 7-8% compounding interest growth/yr to severely out gain the 4-5% interest you'll be paying on the mortgage?
Don't give the bank any extra cash now
Posted on 3/3/20 at 3:02 pm to Zachary
Sold our last house while building the newest one. Worked it out as part of the sale that we would rent from the new owner for six months at a pre-determined rent figure while the new house was being built. Worked out great for all involved as we were able to minimize the amount of stuff we put into storage and were able to make a seamless transition into the new house. 
Posted on 3/3/20 at 3:07 pm to DirtyMikeandtheBoys
quote:
This thread is extremely out of place on the OT. Not because it’s a money talk thread, but because all the OT baws claim to pay cash for their real estate
Just the dumb ones. We real ballers finance at 3% so we can invest the 12 million in cash at 8%.
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