We put a deposit down on a new home build, and I’m worried about what will happen if our existing home doesn’t sell by the time the new home is built. Here are the numbers:
New home: $800K
Deposit paid: $160K
Due at closing: $640K
Existing home for sale: $1.325M (Agent suggested a $1.4M listing price)
Mortgage remaining: $350K
Debt:
Only the existing mortgage: $3,500/month
Income: $210K
Cash on hand: $200K
Retirement account value: $750K
Credit score: 840
I have three credit cards with $125K available, all paid in full every month. The house hasn’t hit the MLS yet, but it may sell immediately when it does. I told my agent I would accept any offer over $1.2M. My intent is to sell the old house and show up with cash at closing on Feb 28th. But if the home doesn’t sell, what will I do? Will a bank write me a new mortgage while I still have the old one? Do I have enough assets to qualify for a $640K loan? Should I apply for a $500K loan and put down an additional $150K from my cash on hand? I plan to pay off the new mortgage as soon as the old house sells, but should I mention that when applying? I can drop the price of the old house to $1M and still pay off both loans.
When should I apply for the loan if the house hasn’t sold? Thoughts? Things to be concerned about? Things NOT to do?
You should definitely talk to your loan officer now. They can tell you if you’ll be approved for both mortgages given your current financial situation.
With your strong credit score and income, you should be in a good position. Lenders will look at your overall financial health, including your current debt and assets.
It might be wise to apply for a lower loan amount initially, especially if you’re not certain about the sale of your existing home. Having cash on hand can be a strong negotiating tool.
If your house is priced well, it should sell quickly. Don’t panic if it doesn’t sell immediately; just stay proactive and keep communication open with your agent.