Mortgage Question

[SALvation]

I figured I'd ask this here while waiting for the bank to open.

Currently I have a mortgage on my condo. I've put my condo up for sale now. In the meantime, I've started building a house. I've paid for the draws out of my own pocket, so once the house is done, I just need to get a new mortgage. My question is:

If I haven't sold my condo by the time I have to apply for my new mortgage, will that effect my ability to get that new mortgage? Is the bank smart enough to know that my original mortgage will be paid off once I sell my condo? Will it think I'm trying to hold both at the same time?

Thanks.

 

[Zorro]

Inquire about a bridge loan.

 

[MrChicken]

It's been a while since I knew anybody in your spot, so what i know may be out of date.

Yes the bank will look at what your payments are for the condo, just as they do for all of your debts.

OTOH, if your new home has enough built in equity, they'll probably finance it anyway, hoping you will default and they can make money on the sale of it after they foreclose.

The easiest way to get through this is to have a "rentor" lined up so you can show the bank that you have income to offset the mortgaage on the condo.

 

[Bigdude]

People still buy condo's?

 

[jagr10]

First off, it's not always the best thing to build another house or buy one before you sell your other property (unless you're rich). The bank will definitely look at your current situation and if you already have a mortgage then they'll either flat out deny you, offer you higher interest on the mortgage for the house, give you the mortgage at a good rate with the condo as collateral.

 

[dirtboy]

Originally posted by: SALvation
If I haven't sold my condo by the time I have to apply for my new mortgage, will that effect my ability to get that new mortgage?

Yes, unless you have a large enough income to hold down two house payments.

 

[KenGr]

Originally posted by: Zorro
Inquire about a bridge loan.

It doesn't look like the bridge loan applies here. The bridge is just a way to break the new mortgage into two sections, one that is a long term mortgage and one that's short term, to be paid as a lump sum note when you sell the old property. The bridge is limited to the equity in the old property and that is fine, but I don't think the bank would step back from the requirement that you have adequate income to pay the monthly payments on both the existing load and on the new long term mortgage. In other words, they aren't going to let you cash out a bridge loan.