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Started By
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Buying a lot, question on rates
Posted on 4/16/25 at 3:59 pm
Posted on 4/16/25 at 3:59 pm
I am purchasing a lot in old Mandeville and went to two banks. I'll leave their names out of it but both have a lot of experience with lots and property in the area and are more local banks than the national ones.
Question is, I got approved from one so far, 10% down 7.99% interest only.
Does this sound competitive? I know the landscape is all over the map right now in lending, but just curious. I have very good credit, little to no debt but can't shell out cash for this lot at this time. Still have my home that needs to be sold when my son graduates high school next May.
Last lot i bought was cash in Navarre and I sold it before i built on it. This one will be my primary residence due to a divorce last year and moving on.
Thoughts?
Question is, I got approved from one so far, 10% down 7.99% interest only.
Does this sound competitive? I know the landscape is all over the map right now in lending, but just curious. I have very good credit, little to no debt but can't shell out cash for this lot at this time. Still have my home that needs to be sold when my son graduates high school next May.
Last lot i bought was cash in Navarre and I sold it before i built on it. This one will be my primary residence due to a divorce last year and moving on.
Thoughts?
3
Posted on 4/16/25 at 6:49 pm to back9Tiger
quote:It should be okay. It seems like you'll be taking out a construction loan as well, and then once you move in and establish your homestead, then you refinance both loans into a conventional home loan with a lower rate. At least I think that's how my BIL did it.
Thoughts?
Posted on 4/17/25 at 6:24 am to back9Tiger
Most lot loans will be 15%-20% down and around 7.50%.
Interest only is common but if you’re going to be taking out a construction loan, which will require 20% down on the total cost/value, you need to build up equity in the lot as fast a possible so you can get credit for that with your 20% down.
If you’re building within a year, maybe two, you can find 100% LTV options.
Red River Bank is a good place to look… they have an office on the northshore.
But once again… when building a home, equity in the lot and cash liquidity is crucial. Usually the first draw on a construction loan will pay off the lot and it’s usually done at closing. That’s a monthly interest payment from the jump when building.
Interest only is common but if you’re going to be taking out a construction loan, which will require 20% down on the total cost/value, you need to build up equity in the lot as fast a possible so you can get credit for that with your 20% down.
If you’re building within a year, maybe two, you can find 100% LTV options.
Red River Bank is a good place to look… they have an office on the northshore.
But once again… when building a home, equity in the lot and cash liquidity is crucial. Usually the first draw on a construction loan will pay off the lot and it’s usually done at closing. That’s a monthly interest payment from the jump when building.
This post was edited on 4/17/25 at 6:27 am
Posted on 4/17/25 at 7:52 am to pwejr88
I will be taking out a construction loan. I intend to go right into design and then construction. It is an interest only loan so not sure how I would build up equity in the lot unless there is an appraisal that is above what I paid for the lot, correct?
Posted on 4/17/25 at 10:06 am to back9Tiger
You meet your interest only payment obligation then you throw as much towards the principal as possible while saving cash.
Most of it will wash out eventually..
Pay more towards principal now vs pay higher down payment later.
Depending on how the bank calculates your interest, knocking down the principal now would also lower your interest only payments
Most of it will wash out eventually..
Pay more towards principal now vs pay higher down payment later.
Depending on how the bank calculates your interest, knocking down the principal now would also lower your interest only payments
Posted on 4/17/25 at 4:56 pm to back9Tiger
I love how I get downvoted for asking a legitimate question. Don’t ever change TD.
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