Construction loan advantages

We took out a construction loan for our home. We already owned our lot. One thing is that you will have to pay closing costs on the construction loan and pay closing cost on the mortgage too.

You only pay interest on the the construction loan until the home is built. Once built you do the closing on the construction loan and convert it to a mortgage. At least that is the way it went with the bank we used.

We did a construction loan. We already were paying on our lot. At closing of const loan the remainer of lot loan was paid off that way construstion loan bank was first lien holder.

You pay interest on the money that you have drawn. ie.. little in beginning more at finish. I would guess if you did the turn key the contractor is going to add the interest to his cost, since you are essectially using his money as financing.

We subbed ours out so it was not an issue.

There are several different ways to do it.

1. Buy a lot, put money on it, use equity in lot as equity final structure, construction loan for build.

2. Pay a builder down payment, he builds the house, then you get a credit for dwn pmt and loan for rest.

3. You can buy the lot w/construction loan and contract yourself, but you may have equity issues and most construction lenders don't go above 80, some go to 90, but most want you to have equity or "skin in the game".

The real issue you will have is what will the final value be. You may be better buying your lot and paying on or improving it. You will probably need 20%, but $20% on $60k is a lot less than 20% on $260k.

One time close loans from Whitney are the tits! Now getting approved is a little difficult, but def the best value around. I think it's $500 to modify to a fixed rate when done? That's not typical of most one time closings.