When do I get a new home construction loan – before or after I move out my home?


People usually end up in need of a new home construction loan when they already have a house but want a custom-built one. For a certain period of time, they may get to handle two and even 3 mortgage loans - one for their current house if its mortgage is not yet repaid, and one for the construction and yet a permanent one for the new house.

Moving Out With A New Home Construction Loan

It may be recommended that you start building your new house after you have sold your current one. If you pay for building your new house while you haven't yet sold your oldie, you may have to pay three mortgage loans at the same time.

If you manage to sell your house before construction begins, you may use the proceeds to finance a greater part of the construction and avoid paying high new home construction loan rates. You will have to pay rent, but renting a small apartment will be cheaper than mortgage payments of a house.

However, many people do not manage to sell their residence prior to construction beginning, so they do have to stay at home for the time being and manage three mortgages for a limited time. The good thing is a construction to permanent loan will cost cheaper than separate financing and for 6 or 12 months payments will consist of interest accrued on the funds that have been disbursed so far with the construction loan for the new home.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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