Can I replace my old house while keeping my existing home mortgage.?

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My wife and I own a home in Pasadena, CA. I bought it for $ 210,000 in 2000, and through a refinancing, I’m paying 5.0% fixed.

This old house is too small, and is just about falling apart. We’d like to get a bigger house with a basement, but buying into a bigger house would mean getting a new loan. Plus, we like the property location. When we had the house appraised 12 months ago, it was estimated to be worth $ 550,000 — most of that value is in the land, as real-estate is super-expensive around here.

I’d like to hang on to the existing 5.0% fixed mortgage, stay on the property, and just have a new house put in to replace the little “shack”. Is this possible? What are the possible complications? How do I go about this process?

7 Comments
  1. Reply
    Tie the good looking Chinese guy
    April 30, 2011 at 12:15 am

    i payed $ 850, 000 in orange county in 2003 you ba stard

  2. Reply
    Faye H
    April 30, 2011 at 12:22 am

    It’s your house. If you want to tear it down and build something else, who’s going to stop you?

    If you’re taking out a new loan for for the construction, you’ll need to have enough equity in the land for any lending institution to give you a second loan though.

  3. Reply
    zimba
    April 30, 2011 at 1:13 am

    i dont know much about this but i’d guess you’d have to get a seperate loan for whatever u want to build or fix. but surely you could hunt around and find another decent loan like the one you have now.

  4. Reply
    Cute But Evil
    April 30, 2011 at 1:34 am

    I am just jealous you can afford a $ 210,000 mortgage. I live in another expensive state and bought my big falling down shack in 1998 and it’s worth more now but I can’t afford to refinance either so we are stuck fixing it up room by room…really fun with a house this old…NOT!

  5. Reply
    JAY B
    April 30, 2011 at 2:15 am

    aslong as its your property and not rented you can do what ever you want to do with it(aslong as you get planning permission from the council).

  6. Reply
    Ron B
    April 30, 2011 at 2:27 am

    If you have the money to rebuild without needing a loan you may have a chance. You will have to go to your lender and ask them if they will allow you to rebuild. If you do not ask, they could call the loan and ask for immediate repayment. They will probably want you to show them plans and estimated costs of the new home.
    If you need money for the rebuild, you can obtain a construction loan that will give you cash for the work, and pay off your old loan. When you refinance that loan, You can have your broker buy the loan down to 5% again.

  7. Reply
    Skip
    April 30, 2011 at 2:32 am

    Before you do anything in Pasadena I suggest you check with the City Planning Commission of Pasadena. They have lots of restrictions in their building codes. Find out from them what they will allow you to build there.

    In some cities a house is considered remodeling if you leave one of the original walls standing which makes getting the permit a lot easier. You construction person will understand this concept.

    You want check the other homes in the area and insure that you are not overbuilding for the neighborhood,in other words your house will be the most expensive house in the entire neighborhood.

    The other thing that comes to mind, are you getting a loan to do the construction or are you gonna pay cash for the construction?

    If you plan to get a loan to pay for the construction you will have to pay off the existing mortgage through the construction loan. Once the construction is completed you will have a new 1st mortgage loan as most lenders now do both the construction loan as well as the permanent mortgage loan, therefore you only have to complete one loan application.

    Once you have the financing completed you might think of getting a construction company to do a drawing and give you an estimate of the cost before and after. Try about 2-3 with each giving you an estimate of the cost before and after.

    Beware of the contract and cost over runs, this could cost you lots of money that you might not have. In other words who’s fault is it when no one shows up for work and the reason they did not show up.

    Get several references from the construction guys and make sure you call each and everyone.

    I hope this has been of some use to you, good luck.

    “FIGHT ON”

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