- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Trying to buy a Lot and apply for Construction Loan....advice needed
Posted on 5/22/13 at 9:53 am
Posted on 5/22/13 at 9:53 am
So I'm in the process of buying a lot and apply for a construction loan.
I may not have time to get an appraisal before I have to close on the lot. So I may have to do them separately and pay closing costs twice, which sucks.
Bank told me I was going to have to put 35% down if closing on just the lot. That seems high to me.
Also, no one has been able to give me information on how much I'll have to put down for the construction loan. Said it would depend on the appraisal. Does anyone have any idea?
I may not have time to get an appraisal before I have to close on the lot. So I may have to do them separately and pay closing costs twice, which sucks.
Bank told me I was going to have to put 35% down if closing on just the lot. That seems high to me.
Also, no one has been able to give me information on how much I'll have to put down for the construction loan. Said it would depend on the appraisal. Does anyone have any idea?
1
Posted on 5/22/13 at 11:11 am to GoldenSombrero
Can you reserve the lot from seller until you get plans/drawings for construction loan to go to lender with and use construction loan initial draw for lot payment? You could do this with 20% down, pay interest only during construction, and save yourself a closing.
Posted on 5/22/13 at 11:46 am to ItNeverRains
Yeah that's what I'm trying to do. I just have to close by mid June and the bank doesn't know if they will have appraisal done by then.
So your saying 20% down on the entire amount of the loan. So if I borrow $300,000 I need to have $60K down payment? Was hoping to have to put that much down.
So your saying 20% down on the entire amount of the loan. So if I borrow $300,000 I need to have $60K down payment? Was hoping to have to put that much down.
Posted on 5/22/13 at 11:49 am to ItNeverRains
You'll probably need another 20% down for construction. When you close on lot, do a no work affidavit and it will save you some money when it comes time for construction. When we built, we needed 30 or 35% down on the lot. We paid on the lot a few years and then needed 20% down on what the plans appraised for.
Posted on 5/22/13 at 11:57 am to guttata
You can do an FHA construction loan @ 3.5% down. Don't let anyone tell you that you can't, I build those everyday. Where are you building?
Posted on 5/22/13 at 12:01 pm to Franktowntiger7
quote:
FHA construction loan @ 3.5% down.
Is that something my bank would offer? Or would I need to go through a company specializing in those loans?
Building in Fayetteville.
Posted on 5/22/13 at 12:24 pm to GoldenSombrero
Posted on 5/22/13 at 6:41 pm to GoldenSombrero
quote:
Is that something my bank would offer? Or would I need to go through a company specializing in those loans?
You can go through a mortgage broker. FHA is a government insured loan that requires you to pay PMI (Private Mortgage Insurance) when putting less than 20% down. With that $300,000 loan you mentioned, you would pay more than $300 per month on extra for PMI. Are you planning to subcontract the house out yourself or have a contractor do a turnkey build?
Posted on 5/22/13 at 7:16 pm to Franktowntiger7
That is what I am looking at doing, in fact I talked with some Schumacher people today who hooked me up with a lender who has been very helpful today with answering questions on the FHA loan for the lot, construction and final closing on the whole home and lot.
Now if I understand this right, you will have to pay PMI,or you can refinance to maybe a conventional down the line. I may be wrong this is all new to me.
Now if I understand this right, you will have to pay PMI,or you can refinance to maybe a conventional down the line. I may be wrong this is all new to me.
This post was edited on 5/22/13 at 7:18 pm
Posted on 5/22/13 at 7:36 pm to burgeman
quote:
Now if I understand this right, you will have to pay PMI,or you can refinance to maybe a conventional down the line. I may be wrong this is all new to me
If you keep the FHA loan, you will have to pay PMI for the life of the loan. You can refinance to conventional later on if you'd like.
Posted on 5/22/13 at 8:42 pm to Franktowntiger7
Franktown, you ever dealt with these Huntington National Bank guys? I got the referral through the Schumacher website and there offer is very attractive. Just wondering if you have any insight.
Posted on 5/23/13 at 10:37 am to JonTheTigerFan
quote:
You can go through a mortgage broker. FHA is a government insured loan that requires you to pay PMI (Private Mortgage Insurance) when putting less than 20% down. With that $300,000 loan you mentioned, you would pay more than $300 per month on extra for PMI. Are you planning to subcontract the house out yourself or have a contractor do a turnkey build?
Oh ok. I'm familiar with FHA and PMI but didn't realize you could apply it to new construction. I have a builder and it's a custom build.
Thing is I don't have 20% right now to get the process started, but when I finish building and roll over into permanent financing I hope to have 20% or very close to it. So the PMI would not even come into play. But I work on commission so their are no 100% guarantees.
But I did hear the new FHA loans, at least for refinancing will PMI for the the life of the loan. Not sure if that would apply here as well.
Posted on 5/23/13 at 12:02 pm to Franktowntiger7
quote:
You can do an FHA construction loan @ 3.5% down. Don't let anyone tell you that you can't, I build those everyday. Where are you building?
Look at the fees/terms FHA vs conventional, FHA is garbage.
Yes, on conventional you'll need 20% down of house & lot value, 1st draw from construction loan will secure remainder of balance left on lot.
You could see what builder will charge you to do house turnkey. It'll save you a closing, although I always recommend that custom construction its best to control $.
This post was edited on 5/23/13 at 12:58 pm
Posted on 5/23/13 at 4:00 pm to burgeman
Yes, if you are trying to go under 20% down and are not in a flood zone then Tony is my go to guy. Be prepared for lots of paperwork, but that seems to be the case with everyone these days.
Posted on 5/23/13 at 4:02 pm to ItNeverRains
Yes conventional is better, but not everyone is plunking down 20%
Posted on 5/24/13 at 9:40 am to Franktowntiger7
quote:
Yes conventional is better, but not everyone is plunking down 20%
Sure, but I would pay more for builder to do project turnkey and carry loan than construction to perm FHA.
FHA is garbage
Posted on 5/29/13 at 10:19 am to ItNeverRains
Do you happen to know anyone who would do a turnkey construction? Seems like it would be a pretty big risk on the builder if the buyer does not come through.
Posted on 5/29/13 at 11:38 am to burgeman
quote:
Do you happen to know anyone who would do a turnkey construction? Seems like it would be a pretty big risk on the builder if the buyer does not come through.
Im in Nashville, I have two contacts in BR, but both are custom 750k and up builders.
Typically builder get 3-5% upfront in contract to do turnkey, so 300k and buyer walks leaves builder 9-15k minimum for his troubles.
This post was edited on 5/29/13 at 11:39 am
Posted on 5/29/13 at 12:05 pm to burgeman
quote:
Do you happen to know anyone who would do a turnkey construction? Seems like it would be a pretty big risk on the builder if the buyer does not come through.
Where are u located? I recently went through the process near Baton Rouge. There are plenty of local custom builders who will allow you to give them a deposit (earnest money) to get started and do a turnkey build. They may already own the lot or they can buy the lot from you and you can close on the entire thing at the end. All they asked for from me was an approval letter up front, me to provide the house plans and the earnest money.
Posted on 5/29/13 at 12:19 pm to JonTheTigerFan
I am in Hammond, so 3-10% earnest money upfront should do the trick with most builders?
Page 1 of 2
Back to top
Follow TigerDroppings for LSU Football News