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re: Land used in getting loan for new house
Posted on 7/3/13 at 2:29 pm to Broke
Posted on 7/3/13 at 2:29 pm to Broke
Unless of course you build in a rural area and your appraisal for said land and house is 50 k less than your cost because there are no comps. Didn't really matter though cause its where I plan to stay for good so I wasn't worried about it.
0
Posted on 7/3/13 at 2:35 pm to ScottieP
quote:
If possible you could subdivide the 2 acres and put the house on a half acre lot and have 1.5 acres of land free from the home mortgage.
I would do this if you are at 20% equity
Posted on 7/3/13 at 4:02 pm to Bear Is Dead
quote:
I would do this if you are at 20% equity
Meh. What's he gonna do with 1.5 acres behind his former home with no access?
Posted on 7/3/13 at 4:55 pm to Broke
quote:
Meh. What's he gonna do with 1.5 acres behind his former home with no access?
Sell 3 more lots.
Posted on 7/3/13 at 5:03 pm to slapahoe
If you're building on said land it will be factored into loan scenario.
If not building on said land it's practically worthless regarding loan scenario.
If not building on said land it's practically worthless regarding loan scenario.
Posted on 7/3/13 at 7:32 pm to ItNeverRains
quote:
If you're building on said land it will be factored into loan scenario.
If not building on said land it's practically worthless regarding loan scenario.
I will be building on the lot.
Posted on 7/4/13 at 8:00 am to slapahoe
I don't really understand the confusion, but I will explain the process.
Land-
The more you own and allow to be mortgaged the more value you will have.
Be aware that the current value is not directly proportionate to your equity. Meaning if you have a lot worth 10k, you don't automatically already have 10k of equity. The amount of equity you have is really just an opinion of value and what your bank will allow you to borrow. If raw land is worth more as commercial, then a home on it lowers its value. However, usually a home with land is more valuable. An example is MH with no land is worth less than MH with land. I use this because it is easy to grasp. A MH is worth it's book value like a car. The lot is worth it's raw land value. You put them together and immobilize the MH or tie it to the land and it is appraised somewhat like a house, can't be moved, less risky, etc. so it is worth more.
Your issue is how much equity does your bank require. If you mortgage all the land, then you have more equity, not down payment, you are not paying them for the land, you are borrowing the money to pay other people to build, fees, etc.
The cost to build the structure is the same whether you mortgage 50x100 or 2 acres. The risk goes down the more land you put up, because it shows you have more to lose, you are risking more, if it is foreclosed on the bank has more room to absorb the cost, etc. Your final appraisal is worth more, but there is a point of diminishing returns.
If you put up a rural tract, your home will be compared to other rural tracts, where more land does not mean a dollar for dollar increase in value. If you own two subdivision lots, then it it definitely worth more than the "same (key word)" house with one lot. If you want the additional land for other things, then survey the tract and only mortgage a portion. However, be aware that you will have a less valuable home, you will have a riskier transaction, and you may have PMI, higher rate, etc., associated with that.
Land-
The more you own and allow to be mortgaged the more value you will have.
Be aware that the current value is not directly proportionate to your equity. Meaning if you have a lot worth 10k, you don't automatically already have 10k of equity. The amount of equity you have is really just an opinion of value and what your bank will allow you to borrow. If raw land is worth more as commercial, then a home on it lowers its value. However, usually a home with land is more valuable. An example is MH with no land is worth less than MH with land. I use this because it is easy to grasp. A MH is worth it's book value like a car. The lot is worth it's raw land value. You put them together and immobilize the MH or tie it to the land and it is appraised somewhat like a house, can't be moved, less risky, etc. so it is worth more.
Your issue is how much equity does your bank require. If you mortgage all the land, then you have more equity, not down payment, you are not paying them for the land, you are borrowing the money to pay other people to build, fees, etc.
The cost to build the structure is the same whether you mortgage 50x100 or 2 acres. The risk goes down the more land you put up, because it shows you have more to lose, you are risking more, if it is foreclosed on the bank has more room to absorb the cost, etc. Your final appraisal is worth more, but there is a point of diminishing returns.
If you put up a rural tract, your home will be compared to other rural tracts, where more land does not mean a dollar for dollar increase in value. If you own two subdivision lots, then it it definitely worth more than the "same (key word)" house with one lot. If you want the additional land for other things, then survey the tract and only mortgage a portion. However, be aware that you will have a less valuable home, you will have a riskier transaction, and you may have PMI, higher rate, etc., associated with that.
Posted on 7/4/13 at 8:04 am to slapahoe
Depending on where you are at the banks aren't loving land as collateral right now.
This post was edited on 7/4/13 at 8:05 am
Posted on 7/6/13 at 11:39 am to trillhog
Who told you that?
Land is always a solid asset.. They not making any more of it.
Obv location is key, but for the most part banks always have and will always land collateral.
Once again obv location is ultimate decider on ow much they love it.
I have 6 acres I'm building my house on... It only appraised for 25k... It's Ina rural area but joins my family's land.
Perfect situation for me, I have no intentions of selling or moving.
I got to use it as part of down payment... 5300 sq ft house... Being able to use it helps.
Land is always a solid asset.. They not making any more of it.
Obv location is key, but for the most part banks always have and will always land collateral.
Once again obv location is ultimate decider on ow much they love it.
I have 6 acres I'm building my house on... It only appraised for 25k... It's Ina rural area but joins my family's land.
Perfect situation for me, I have no intentions of selling or moving.
I got to use it as part of down payment... 5300 sq ft house... Being able to use it helps.
This post was edited on 7/6/13 at 11:42 am
Posted on 7/6/13 at 10:22 pm to TIGRLEE
quote:
I got to use it as part of down payment
can you explain this? This is what I originally asked but some said I could not and some said yes.
Did you actually get to add $25k to your cash down payment?
Assuming your cash DP was $30k....you got to add another $25k(land) to the $30k?
Posted on 7/7/13 at 6:47 am to slapahoe
Think of it like this. If what your building (dwelling) is valued at 200k and land is valued at 30k, your house & land = 230k. Most construction to perm I know of (i'm not a lender) is 20% LTV. So you'll need 46k down, if you own 30k land outright you need to come to table with 16k out of pocket.
Someone mentioned something about FHA construction loans also with less $ down, but i'd avoid FHA like the plague.
TIGERLEE, Trill is correct if land owned not being used in scope of project. Assets mean nothing in traditional loan scenarios anymore, its income to debt (last 2 years) & credit score.
Someone mentioned something about FHA construction loans also with less $ down, but i'd avoid FHA like the plague.
TIGERLEE, Trill is correct if land owned not being used in scope of project. Assets mean nothing in traditional loan scenarios anymore, its income to debt (last 2 years) & credit score.
This post was edited on 7/7/13 at 6:48 am
Posted on 7/7/13 at 7:46 pm to slapahoe
Whatever your property appraises for is the number you can use...
Works like cash in the bank.
Works like cash in the bank.
Posted on 7/7/13 at 8:04 pm to TIGRLEE
quote:
Whatever your property appraises for is the number you can use...
Works like cash in the bank.
well that is wonderful if in fact it is true. not saying you are a liar
Posted on 7/8/13 at 7:24 am to TIGRLEE
quote:
Who told you that?
my banker
quote:
appraised for 25k
well i don't think they are gonna lose sleep over 25k
Posted on 7/8/13 at 7:29 am to trillhog
quote:
Depending on where you are at the banks aren't loving land as collateral right now.
It isn't collateral. It's equity. Period. He plans to build the house on the land.
Posted on 7/8/13 at 7:37 am to VABuckeye
quote:
It isn't collateral. It's equity. Period. He plans to build the house on the land.
whatever you want to call it, if he doesn't make the payments he'll lose it, what i call collateral.
Posted on 7/8/13 at 7:42 am to trillhog
There's a huge difference. If it's the land the house is to be built on and he owns the land then it counts as part of the down payment. He owns the land so no he can't lose it by not making payments because there are no payments to make until a house is built and a mortgage is in place.
If you want to act like you know what you're talking about you should learn the proper terms to use. Otherwise, you just look like you're talking out of your arse.
If you want to act like you know what you're talking about you should learn the proper terms to use. Otherwise, you just look like you're talking out of your arse.
Posted on 7/8/13 at 7:50 am to VABuckeye
quote:
If you want to act like you know what you're talking about you should learn the proper terms to use. Otherwise, you just look like you're talking out of your arse.
calm down dude damn, to early to be so angry.
quote:
He owns the land so no he can't lose it by not making payments because there are no payments to make until a house is built and a mortgage is in place.
i was assuming the house was built and mortgage was in place and he'd used the land as collateral or else what's the point of the discussion.
This post was edited on 7/8/13 at 7:52 am
Posted on 7/8/13 at 10:28 pm to trillhog
Hijacking my own thread now
What is the going rate price/sq ft for a new house in the lafayette or baton rouge area? assuming granite, stainless steel appliances, hardwood floor etc. I know its tough to give estimate with this limited info but I was hoping some here recently have built and would not mind sharing
What is the going rate price/sq ft for a new house in the lafayette or baton rouge area? assuming granite, stainless steel appliances, hardwood floor etc. I know its tough to give estimate with this limited info but I was hoping some here recently have built and would not mind sharing
Posted on 7/9/13 at 6:54 am to slapahoe
I probably have more upgrades than most due to neighborhood covenants. The counter is material cost have also skyrocketed since I built in 2011.
I paid about 130/sq. ft. 2800 down, 300 up.
Edit: I live 500 miles away.
I paid about 130/sq. ft. 2800 down, 300 up.
Edit: I live 500 miles away.
This post was edited on 7/9/13 at 6:56 am
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