We are staying in our current home. Our new build has about two months left and we just put our current house on the market this week. We have the mortgage paid off on our current home.

I believe the technical answer is...it depends. My husband and I will start digging next month. We've spoke to the bank and expressed our desire to stay in our current house, like you, rent on a sub-par rental would be close to what our mortgage payment currently is. Our lot will be paid off by the time we close later this month so we're using that as the equity for the construction note. The first thing is that you can't borrow more than 80% of what the contruction house appraises at. So in our case, the lot should cover this amount. If we happen to go over the 80%, we'll need to take out a personal note or 2nd mortgage on our current home and pay it off when this house sells. The other part of it is that you have to have the income to supplement both the construction note along with the current mortgage (unless you find a builder that is willing to finance it for you until the project is finished). Our banker advised us that essentially we have to have the debt to income (including both notes) to be less than 35% of our wages.

We sold our house and then rented it back from our buyer while we were building. It worked for us and our buyer (more of a benefit for us). This wasn't due to a money issue just a hot market and the buyer really wanted our house. Of course the transaction was nice to have the sale money in the bank. Good luck on your new build!

Kimberly S. I've heard of that scenario and sounds like a good idea. However, it takes the right buyer to be willing and able to rent it back to you. can I ask if their rent price was similar to your mortgage or more money that was in line with the rental market?

Financing 80% of the construction is totally dependent on the bank. We will be going through a local Farm bank (farm credit)... they will finance up to 95% of the appraised value on a one-time close construction loan. The interest rate is a little bit higher (1/2 - 3/4 of a point higher), but we can pay a fee after the house is complete (~$800) to drop to a lower rate, it it's available after the house is finished (this isn't a refi... just a rate change for the existing loan).

To answer your question... we will be selling our home and moving into a rental (nice apartments nearby) while we build. Being in an apartment isn't my preference, but it's the cheapest option. We looked at moving a mobile home onto the property to live in during the build as well as a camper... the apartment is the cheapest option. We could afford two house payments, but we are choosing not to have two payments.

If your market is hot now, then put your house on the market now and sell. Who knows what will happen by the time you've finished building. Do you really want to chance the market going down?

We sold our condo in May and are living in a rental now until our build is done, which will hopefully be around Dec. Our market was quite hot and we didn't want to chance not selling. Good thing we sold when we did, because in our building, sale prices have dropped somewhat and the market has slowed a bit.

It really comes down to your financial situation.

Some people need the equity out of the house to buy the next house. In that situation, your pretty much have to sell up front. For some people, the lender won't approve the debt to income ratio of carrying both loans.

If you can get approved for and have the up front cash for the down payment for both loans, you will not need to move.

We carried both and had a 3 week overlap between move in on the new house to final sale of the old house.

While the question is hypothetical in that we don't know how big a reno we're talking about, I'm going to go with a pretty strong yes. I am very frugal, and my delayed gratification gene is quite strong, so it'd take a very big renovation to make me leave my house. While selling? Of course! Why not?

With two special needs kids, our house is not really "showable." So, we'll build, move, and THEN put the house on the market. But I'm not particularly concerned about it taking long to well. And we have enough liquid assets that the bank is comfortable with us holding two mortgages for a while. It helps that we're not maxing out our lendability to build the house, though. Even with BOTH mortgage payments, we're below the DTI ratio they like.

Sell now with a contingency that you either can't close until X date, or that they have to let you rent from them until X date.

I've seen trainwrecks where there are 3 houses all sold, contingent upon the buyers selling their current homes. You can specify whatever you want in your listing for contingencies

I totally understand the scary thought of your house not selling. 3+ years ago I would probably think differently than today. However our market is not going to slow way down anytime in the next year or so at least. In North Dallas we have a handful of large corporations moving their home bases here and there are so many people having to relocate that houses are just flying off the market. These relocated employees are buying houses as soon as they see one they like even if they haven't even actually relocated yet. I would however put my house on the market 2-3 months before guesstimated completion of the build and move in with my parents...

And I was wrong about the rental cost as I actually just looked for rentals in my area and for a smaller completely non fancy house its more like $800+ each month than what our mortgage is.
Those of you that rented, were you in a similar market that your rental cost way more than your mortgage?
I obviously need to speak to a lender (we haven't finalized which one we are going with yet) Good heavens I love my parents, but living there for 10+months gives me anxiety, but I refuse to shell out that much extra money to rent, it just isn't the financially smart move here. If we could only get so lucky to find a buyer willing to rent back to us...

Lindsy We did pay the buyers mortgage for them. So it cost more than our mortgage but the savings versus us moving into a rental was substantial difference so it worked great for us. And yes it takes the right buyer and seller to make this work. My dad gave us the idea he had done this once himself with a buyer.

Lindsy...I have to laugh but I can't because I'm trying not to cry. Those businesses of which you speak are probably some of the businesses fleeing our state of Illinois. Wonderful for you guys and very sad for our state.

our state is so screwed up.

Miss Red, some of us here in TX are bein' pushed out, 'cause it's getting far too expensive to live here and we can't find anything we are willing to overpay for, lol.

Illinois doesn't look so bad, from where I'm sittin'.

:-)

come on over!!!!

IloveRed, a majority of the corporations are coming from California due to their high regulations and taxes.

But yes, house prices for sellers are awesome, the prices have rised like crazy.
For example, everyone on this board says building is way more expensive than buying existing, but not where I live. I couldn't buy in the school district we are building in..

We are living in our current house while we build. We live right next door to the build so it's extremely convenient to keep an eye on things. We are in N. Texas too and are banking on the housing market staying strong for awhile yet. The current plan is to list in July and if it sells quickly, hope to get buyers who are willing to wait for either a long closing or rent back to us if our house isn't ready. I'm willing to move into a not quite completed house as long as it has 1 working bathroom. Not sure how the COO works though. Our realtor told us not to wait past the summer because of families wanting to be settled before school in the fall.

And I completely agree that here it is cheaper to build than to buy right now. The prices are crazy! Good for us when we sell but man, I would hate to be a buyer right now.

gthigpen- I'm glad you reiterated about it being cheaper to build here than buy. I was just waiting on someone to pounce about that not possibly being true. :)

I looked at your profile to try and private messages you, but didn't see a message button. I was just wondering where (or if you'd rather say what school district to be more vague) We are building in Allen, but on the outskirts closer to Lucas, if you are familiar..
Have you started building? Would you share what builder you are using?
I completely agree about selling in the summer, however, I had a realtor tell me that in the fall when their are less homes on the market you often have the upper hand because they just can't easily go find another if they want to be in that area and price range. We won't be able to break ground until probably June I'm thinking. Still in design phase, not sure how long the permits and such take..

gthigpen, Also can you tell me if you are able to stay in your house because youre debt to income ratio was enough to carry both loans? Or was your lender just confident in when you sell all will be good? Did they tell or advise you when you need to sell? It would be nice to hear from someone local how the bank felt about not having sold your home first. unless you have a boat load of cash in the bank, then none of my questions matter, lol.

if someone can tell me how to message, we could do that instead..

Lindsy, I just tried messaging you, but your message button isn't turned on. It defaults to "off" and you have to go into your privacy settings (I think...) to activate it.

(I wanted to talk with you about cheaper to build vs buy in TX, lol.)

ODD - I found it! see if you can message me now. :)

Lindsy, if you are trying to do a contingency, you wouldn't be able to close on the new loan until the old loan is paid off. I know that most builders will not take that risk.

Not yet, lol. I'll give it a few minutes...?

My builder hasn't said a word about that situation and I've spoken to him about my difficulties in deciding when to sell. He isn't carrying any of the loans, just the bank.

We will wait until our house is finished, or nearly so, to put our house on the market. We have no mortgage on it, so other than taxes on both properties it won't cause unbearable expenses. We've done the math and can make payments on the new house even if our old one doesn't sell, although it would be highly preferable if it does. Part of the problem is that our current house is an old family home that we own outright but my husband keeps holding out hope someone else in the family will want it.

Lindsy - I can't figure out how to turn on my messages. I went into my profile, but can't see anywhere to edit it. I see 'messages' as an option for me to click, but it says I have zero messages. ?? I couldn't see your message button either.

We aren't using a builder. My husband is acting as the GC. Jury is still out on how wise that decision is. We live by White Rock Lake, so an older neighborhood and no HOA or subdivision rules. We can build a hot pink house made entirely out of metal and stucco if we want. :) Not our design, but we could if we wanted to! We are doing a completely custom build...designed by an architect and we are picking and buying everything ourselves. So we aren't at the mercy of the builder's choices or prices. We have a ton of equity in our current house...it's almost paid off and has over tripled in value over the last 10 years. So we refinanced it earlier last year and used the equity to buy the lot next door and still have enough to almost completely fund the build. We had to take out a small construction loan for the remainder. No plans to roll that into a permanent mortgage. Once our house sells, we should be able to pay off our current mortgage plus the construction loan. If it doesn't sell, we should be able to continue to cover the existing mortgage and the construction loan payments. We don't want to do that forever, but could if necessary.

Yes, we have started building. Framing is almost done. Hoping to deck roof and do sheathing next week. Our windows are in and the supplier is waiting for our go-signal so they can deliver. Trying to move as fast as possible!

gthigpen, while on the main page of the form click on your icon top right, then click edit profile, then on the left side you should see Advanced Settings, then the 2nd to last question asks who can message you, choose anyone.

Although I did that several days ago, I'm still not sure if it worked on my profile

And how do you make my name green/click able in your previous posts? I still haven't figured that one out..

I still can't message ya, Miss Lindsy.... :-)

It's been awhile since I set up my messaging stuff, but is it necessary to click on some kind of "save" button to save changes?

Lindsy - To make a name's text clickable, I copy the name from a previous post. Not just retype it, but click and drag over the name to copy it then paste it in the post. I did eventually find your steps in the Advanced settings and tried them last week, but I still don't think it worked for me. I definitely have 'Anyone can message me' selected.

I'm still in my current home while I build. Couldn't think of anything to do about 5 (now 4) cats. Can't rent anywhere with that many. But I didn't seek a loan. I own my current house outright so there'd be no benefit in moving out and renting somewhere. Hoping to put the house on the market this late spring.

ODD, I definitely clicked save, I checked it again too. Must be a glitch...

Debating this now myself. Things to consider, if sell and move you are not only going into the hassle of moving y our stuff twice but will be paying movers twice which is costly. That said the market will be hot in the coming months, who knows by end of year when my house should be done.