Selling House- New Mortgage

[Mike S.]

Selling House- New Mortgage

So we are selling our house Memorial Day in the Chicago suburbs and moving to Kansas City. With the proceeds from our house sale we will have enough money to pay off our current mortgage (3.75% 30 year conventional loan) and have more than enough for a 20% downpayment on a new house (we have excellent credit). We will be staying with family in KC until we can find a new house. I have a couple of questions on the process:

1. I'm assuming we pay off our current loan and apply for a new loan since our current interest rate in pretty high. I think we will be looking at a conventional 20 year for our new loan.
2. We aren't sure how quickly we will find a new house in KC (could be days, could be 6+ months). Should we apply for a new loan right away? I know in this hot market we have to be prepared to move fast and any buyer is going to want us to be pre-approved, but I also know pre-approval only last so long.
3. What are the tax ramifications on the money we have for a downpayment (under $200k) if we don't buy right away?

Thanks in advance!

[Dan Krupa]

@Mike S. second everything @Mo Weis said