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I apologize for this not being a tax question, but there are smart people here that may know:

My current home is paid off. Planning on building a new home and sell the current.

I have a decent amount to put down on new construction loan but not enough to buy outright until I sell my current home.

I was planning on a cash-out refinance to tap into my current home equity. When the lender heard of my plans to pay it off with the sale of my current home, he cautioned that I would have to wait at least 8 months to avoid a pre-payment penalty, even though there isn't technically supposed to be a pre-payment penalty on the loan.

Trying to make sense of this. Obviously the lender or whomever he would be selling the loan to would be wanting to capture more interest to recoup the cost of the loan. But is there a different way about this? Find a different lender?

The new house will likely take at least 6 months to build so maybe not a big deal to wait a couple months after finished to sell the current home. Though I wouldn't want to miss out on a potential buyer for my current house if they weren't willing to wait. Also just don't want to have two homes any longer than I need to.

What's my cheapest/best option? Internet searching has not been helpful.

Thank you much,
Jeff
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