down payment tied up in equity of existing home

16 years ago

I wasn't sure how to title my post, but here is our situation... most of the down payment for our build is tied up in the equity of our existing house and one of the rental properties we own. We have both properties on the market (just listed) and had planned to break ground in just a few weeks. The bank, who at first seemed to have no problem with the fact that we needed to sell these 2 properties, is now telling us that we may need to be liquid before construction begins. Their loan committee is meeting this week to decide if we are a "safe risk" to start construction before our houses are sold. Is this normal? Did most of you have enough cash reserves that this wasn't an issue; or did you sell, then rent while building? As my husband says, we are asset rich and cash poor.

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Comments (3)

ncamy
16 years ago
Sort of the same situation here (except we haven't talked to banks yet.) We're renting while we wait to sell. And boy am I ever glad we have waited. I thought our house would sell in 3-4 months and it's been on the market for 14 months as of right now. We've already moved to our jobs two hours away from the one for sale.
mdev
16 years ago
we sold and rented while building. all happened right as the bottom was falling out of the market.
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Nancy Adamopoulos
16 years ago
We took out a home equity line of credit on the old house at closing for the new house to temporarily cover the down payment until it sold. We put the old house on the market 3 months later after taking some time to fix it up a bit(I couldn't do it while we lived in the house as we had a new baby). Luckily for us it paid off- the house sold in 1.5 weeks. It was at the start of the real estate collapse (Spring 2008).