Buying new home dirt build with sale of old home (Howe: apartment, rental)

[niwmik]

I'm in the process of looking at a new home dirt build that would be completed in approximately 6 months. I have 5% to put down, and 15% in equity after sale of the old house (minus fees associated with sale of home). What would be the best approach in financing the new house (assuming I have 750 credit score)?

1. Do a 80/15/5% loans, and then pay off 15% loan after sale of old home. This would mean I would have to qualify for both old home and new home loan?

2. If the builder was willing to work a contingency sale, close on the old home and then close on new home with funds from sale and savings.

3. Sale old home, find temporary housing, finance new home with 20% down, this would mean I would only have to qualify for new loan.

[Houston321]

I would choose number 3. It's better to have the money in the bank, then proceed. The sale of your old home is not guaranteed. I've seen many people get burned this way.

[cheryjohns]

There is currently an alternative to a 80/15/5. Rather than do two loans, with the smaller at much higher interest rates - you can do a 95% with a one-time PMI fee, that translates into less money than the 15% at higher rates (Fannie Mae currently in big competition with FHA, resulting in a PMI battle). However, if you will be making 15% in the sale, you can close on that first - then close on the new one. Yes, on the continency - which they will most likely do. However, don't go with a Realtor the builder suggests to list the house - they push Realtors that in turn push you to sell faster and at less, which will reduce your equity.

Just a note: you could wait on a contract on the old house, then shop inventory, which will result in a much lower price on the new house.

[CuriousMTA]

Thumbs up on #3, with how hard it is to sell a house these days at a decent price.

[DavidAg02]

You can find a pretty good price on a furnished apartment, and there are many that include utilities into the rental price. Declutter your current house, but leave it nicely furnished, and get it on the market at a competitive price while you move to the furnished apartment. Price it competitively because the longer it sits on the market, the more you'll pay in rent.

Get it sold during the 6 month building process, move your stuff into storage, then sit back and wait for your new place to be finished.

[Beto]

# 3 Would probably be your best option.

[jtothemak]

#2 or #3, make sure your old home sells first. What if you can't sell it or it sells for less than you wanted. Sometime you can have unrealistic goals of what a home will sell for or worse a Realtor will tell you home is worth more than it is to get your listing and take their chances after 6 months or so trying to get a price reduction.