Our current primary residence has no mortgage on it. We would like to purchase another home which will become our primary residence. Then after we move in to the new home, sell the home that we are living in now. Will the mortgage company allow us to do this?
No Problem… just sell the house with I believe 2 years of moving out to get the tax benefit.
Owning your existing home outright while buying a new home should work out just fine.
But keep in mind that your new home’s mortgage interest rate and terms and conditions will depend on how strong a borrower you are. While going into debt is never a good idea if you can avoid it, the next best thing is to leverage your assets intelligently and to your financial advantage.
So I wouldn’t form any rock-solid positions on whether or not to encumber your old house in order to get the best and cheapest financing for the new one. Play it to your advantage because the new mortgage may be around for a long time.