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Construction loan question
Posted on 11/11/13 at 12:33 pm
Posted on 11/11/13 at 12:33 pm
How hard is it to get a construction loan? I have 3 acres of land. I'm 23 I make around 60-65K a year right now. I have about $22,000 in savings at the moment. Last I checked, my credit is 650. The only debt I have is a truck note, which I think I owe about 20K or less now.
3
Posted on 11/11/13 at 12:40 pm to Patches O'houlihan
the real question is how hard is to get permanent financing once construction is over, if you do it yourself. I have talked to several people lately who built their own homes and had a very tough time getting permanent financing
Posted on 11/11/13 at 12:52 pm to Tigerpaw123
I will not be doing any of the building.
Posted on 11/11/13 at 1:07 pm to Patches O'houlihan
It won't be hard at all. As long as you've got 20% to put down, you'll be good.
Posted on 11/11/13 at 5:21 pm to guttata
quote:
It won't be hard at all. As long as you've got 20% to put down, you'll be good.
This...just went through the same thing.
Posted on 11/11/13 at 9:20 pm to GoldenSombrero
You can get it done with 5% down.
Posted on 11/12/13 at 12:20 am to guttata
quote:
It won't be hard at all. As long as you've got 20% to put down, you'll be good.
quote:
I have about $22,000 in savings at the moment.
Might be a problem unless he's building a barn.
Posted on 11/12/13 at 7:16 am to Patches O'houlihan
Most banks require you to have prapproval for permanent financing before they will approve the construction loan. Shop that around and that done now.
Posted on 11/12/13 at 7:33 am to pdubya76
That wasn't a problem at all, last yr. the bank that does the construction loan doesn't care. They give you like 8 months, and if you don't have permanent financing, the whole loan amt is due at the end of the 8 mo period, unless you' e converted to permanent financing. I simply shopped around, found the best deal, and the credit union that I did the construction loan with matched the deal.
Posted on 11/12/13 at 8:32 am to Franktowntiger7
quote:
You can get it done with 5% down.
How's that?
Posted on 11/12/13 at 8:34 am to FootballNostradamus
quote:
Might be a problem unless he's building a barn.
I plan on saving enough to cover 20% and then some before I do build for the next 6 months or so. I just didn't know if I should start the process now or what?
Posted on 11/12/13 at 9:13 am to Patches O'houlihan
If you are designing from the ground up, I'd start now. It took us 6 months to get the plans done.
Posted on 11/12/13 at 9:25 am to Patches O'houlihan
with a 650 score your going to need to get your credit score above 680. i work for a bank that does construction loans and thats what we require among other things. if you own the land for more than 6 months you can use the land as the downpayment. you will need the 22k for reserves. alot of banks these days are doing 1 time closings were you close your construction loan and perm loan at the same time. you need to go see your bank and see if they can help.
Posted on 11/12/13 at 10:36 am to hawkeye007
What if I still owe money on the land? Does this change things?
Posted on 11/12/13 at 11:26 am to hawkeye007
quote:
if you own the land for more than 6 months you can use the land as the downpayment.
Wow, didn't know this. Was wondering when I should buy land, I guess at least 6 months prior to building. Thanks for the info!
Posted on 11/12/13 at 1:48 pm to Patches O'houlihan
if you still owe money on the land then you can only use the equity as the down payment. it sounds like you might need to wait a minute before building. i would have my land paid off and use that as the downpayment.
Posted on 11/12/13 at 2:24 pm to hawkeye007
When I bought my lot, I went ahead and got approved for what I thought the total cost of build would be. Now, I didn't really have any idea what the house would cost, cause we were still 3 yrs away from building. Anyhow, once it came time to get a construction loan, I asked my credit union if I should go ahead and payoff the lot loan first and they said no. They said they would just keep the same loan open and add the construction amt to that loan so I would have to do alot of the paper work to open a totally new loan for construction. The first draw of my construction loan paid off the lot loan, and I think I had 3 or 4 more draws after that.
Posted on 11/12/13 at 3:05 pm to guttata
Thanks for the help guys, that gives me a better idea. I will talk to the bank and see if they think I should pay the land off first.
Posted on 11/12/13 at 3:52 pm to hawkeye007
So can someone look at this scenario and help me out:
I have $50k
Lot is $50k
House will cost $300k
Have somewhere to live up to a year rent free so can save at least an additional $25k if we stay for a year.
Should I buy the lot and build in 6+ months and use lot as down payment?
Or save the $50k and save for a year and then do it all at once? May risk losing the lot if we find one and wait.
I have $50k
Lot is $50k
House will cost $300k
Have somewhere to live up to a year rent free so can save at least an additional $25k if we stay for a year.
Should I buy the lot and build in 6+ months and use lot as down payment?
Or save the $50k and save for a year and then do it all at once? May risk losing the lot if we find one and wait.
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