Selling home before building new one

Many times you can use the equity in your existing home (bridge loan) to finance the down payment for your new home construction. Make sure that you will be able to financially make both home payments in the event that your new home is finished before your previous residence is sold.

You may have the option to set up an interest reserve account for the new home construction, so that while your new home is being built, you won't have to make payments on the construction loan.

Timing can be very crucial when trying to sell your current home and have a new home built. You can not sell your current home too early so that you are without a home while your new home is being constructed but you also don't want to wait too long and end up having double housing payments until you are able to sell your old home either. This can sometimes cause a few minor problems trying to appease everyone involved so that everyone is happy and content with the timing. Therefore, the more flexibility you have when selling your current home, while having another built the better off you are usually.

Make sure you understand the terms of the bridge loan if it is used. They vary greatly in the length of interest only payments. Also take into consideration marketing time in your area for the home you have for sale.