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The situation:
I closed on my house in July 2015 - this is the current house my family lives in. We paid 129,500 closing price and I currently owe 120,000 on it today. It appraised for 140,000 at the time of sale. My full payment as it stands today is $911/month. 4 bed / 2 bath, around 1600sqft. Acre lot.
On a sheer whim, my DW and I were looking at a new neighborhood going up nearby (a mile from my current home probably) and these houses are A-MAZING. Needless to say we want one. We are looking into a 6 bed / 4 bath, 3700 sqft. This is the dream home and it starts at 275,000. The subdivision is about 20% developed today.
After walking some models for fun and getting brochures, we are in love. So much in love that I called one of their preferred lenders and was preapproved for 300,000. 95% conventional, 700 middle score. I make 96k a year and I would be the only one on the loan. 30 year fixed at mid 3's rate.
The kickers:
First and foremost, I don't have $15,000 at the moment. Had a big push this year to pay down debt and monthly costs. Because of this however, my DTI is great. I have only my mortgage and my car payment (620/month) as obligation, my credit card obligations are very low. The lending company said I could either sell my current house or keep it and lease it out. Either way is fine because my DTI with both my current mortgage and my new estimated mortgage at 300k (she said about 1850/month) was right at 43%.
The problem:
Problem is money of course. Build time is typically 6 months on these houses and I can comfortably save $1500/month. I can stretch myself and save $2000/month, but it will be tough. I also have an extra check next month (getting paid bi-weekly trick where I get so far ahead, that I have free spend of 2 full paychecks a year) which will be $2600 saved. There is also yearly bonus coming December time of an unknown amount. My estimate is $4000 conservatively. Then there is my tax return which last year was $6000, still an unknown.
Ideally, I'd like to rent my house and keep it, because it is a perfect rental property that could easily go for 1000/month minimum. Otherwise I sell the house for an unknown amount and for unknown profit because of closing costs eating into whatever equity I actually have.
Well, if your lender said it works then Congrats! What a wonderful opportunity!
After some scouting around and research, I figured out a plan for our dream home. The neighborhood is slightly further out, but they build the same floor plans, bigger lots, more upgrades included and way bigger lots.
Preapproved for up to $350,000 (Was 300k, but lender said 350k was ok, if I was selling or renting my current house)
95% Financing
Base house cost - $272,900 with lot premium included
700 middle score
3.37% rate at last look
Shooting for a final price of $285,000 after design
Earnest - $3500
My current home goes on the market sometime tomorrow. RE agent did 5% rate on my sale if I cut him in on the new build. He's more of a friend so I am OK with that. Estimated proceeds on my current house should be between $15k and 20k depending on the final sale price. Enough to cover down payment on the new place.
I go back Wednesday to sign contract and get the build rolling. Delivery date is estimated at March.
Here is my first pic, slab staked out already, just waiting for contract.
Beautiful lot. It's a good thing to sell your home and plow the proceeds into the new one
Keep the photos coming...we love to see these new homes go up!
**Update**
Took my Agent with me to price the house with external upgrades and to get under contract.
There is an interesting development. The lot for my floor plan could only be zoned for a 4 bedroom house, but my floor plan is a 5 bedroom house, so their work around was to not have a closet in the downstairs bedroom, but leave it open. I used this to leverage them to pay for all of the closing costs and I will be getting hardwoods in the foyer, kitchen, mud room, family room and breakfast area. I will most likely extend that to the dining room, study, flex and would be bedroom to cover the whole first floor when I get to design. So not all bad.
We decided on an elevation with bay windows for slight extra sq footage, side entry garage and covered back patio for exterior. Puts the price of the house at $283,000 before design. All in of $300k gives us some room, and with them covering closing, I can come out of pocket if we really want something. Hopefully we stay on budget.
Contract is signed and my current house went on MLS this morning and by midday we had a showing. Good feedback on the house and price, buyer looking for something a bit bigger. The interest is there though.
Hopefully I sail through underwriting, always makes me anxious, but otherwise a great experience so far. We should be getting a call tomorrow to schedule design appointment.
And away we go!
Sounds good! I will be following..
Just a small update, we are 2 days or so on the market and have had 3 showings so far. It seems like the interest is there, no offers yet though.
Scheduled the design appointment for next Friday. We have a budget of about $17K for design, but the cheaper the better. I think we are going to stick with decent cabinets throughout, wooden staircase and I want a data prewire (cat5e) for every bedroom back to a data panel (about $500 or so). I'm thinking that is all we will need while the walls are open. Everything else seems lackluster.
any suggestions as to what I should take care of now and not later as far as upgrades?
If it were me I'd ask for additional outlets, like say one out front for Christmas lights and one on the fireplace mantle (either for christmas decorations or if you want to put lighting around artwork there later). That's all I can think of off the top of my head but I'm sure there's a ton more
@wmweeza wrote:If it were me I'd ask for additional outlets, like say one out front for Christmas lights and one on the fireplace mantle (either for christmas decorations or if you want to put lighting around artwork there later). That's all I can think of off the top of my head but I'm sure there's a ton more
^^^Great point. I have built 3 new homes and always put in extra electrical. Ask to see if you can view the existing electrical schematic for your model so you can plan ahead of the appointment.