We hope to sell our primary residence soon, with the dream to build a new home. We hope to be under contract soon at approximately $300K. We will pay off our $120K mortgage, but then we have additional options. We own a rental home, worth approximately $200K with a $110K mortgage (15 yr mortgage @ 5.125%). We originally thought we'd pay off both mortgages and have approximately $50K to begin building, and add our rental income to our building fund each month. We are reconsidering keeping the money in cash so we can begin building immediately (we are motivated to start our young kids in our new school district next year). In an ideal world, we'd sell both homes and be mortgage free, but our rental is consistently rented and the real estate market is too suppressed to sell now. Considering our tight timeline, is it best to pay everything off, then take out a construction loan, or keep the existing mortgage and cash to build the home?