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New home construction financing

Posted on 4/16/14 at 10:43 pm
Posted by islandtiger
Baton Rouge
Member since Sep 2012
1787 posts
Posted on 4/16/14 at 10:43 pm
I have purchased several homes and undeveloped land over the years, but we are now getting ready to start construction on a new home and I have no experience with new home financing. We have purchased the land, and although we put 25% down, with the drop in realestate values, we have little equity. We have saved enough for about 50% of the construction but only the equivalent of about 35% of the combined house and property. We own our current home mortgage-free and the cash from the eventual sale will add another 35%. What are the best options for structuring the mortgage on the new construction given we will probably need to stay in our current home for about a year post.
Posted by GoldenSombrero
Member since Sep 2010
2651 posts
Posted on 4/16/14 at 11:07 pm to
Recently went through the same process. Hard part was finding a bank with reasonable finance options for new construction. Bank I finally went with financed 85% of the construction costs, based on initial appraisal.

My builder was fixed fee and let me buy/do as much of the work myself as I wanted to. That helped me save alot and we may not need more than what the bank loaned.

If I had 50% of costs I'd try to use my cash early and get the house dryed in. Then get a loan to finish rest of house. Save you quite a bit in interest only payments you make on the loan during building process.
Posted by jeepfreak
Back in the BR
Member since Oct 2003
19433 posts
Posted on 4/17/14 at 8:34 am to
Shoot me an email and I'll put you in contact with one of our mortgage bankers. She'll walk you through the process, but it sounds like you need a construction-to-permanent loan.

mtbjeepfreak@yahoo.com
Posted by hawkeye007
Member since Feb 2010
5844 posts
Posted on 4/17/14 at 12:22 pm to
you just need to do a construction loan. most banks with go up to 90% LTV. you can stay in your current home until you new home is complete and then sale the current home and apply that money to your new construction mortgage.
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