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Construction loan finance question???
Posted on 1/9/17 at 8:23 pm
Posted on 1/9/17 at 8:23 pm
Is it better to buy the lot in cash and then finance the build? Or is it best to do a loan for the entire lot/loan combined and just use the cash as your down payment?
Posted on 1/9/17 at 8:30 pm to BengalBlood81
Step 1 - don't ask this question here.
Posted on 1/9/17 at 8:34 pm to BengalBlood81
Either way. The interest will be the same in the end. If you can negotiate with either the builder or the land owner by paying cash you might want to utilize that leverage.
Posted on 1/9/17 at 8:34 pm to BengalBlood81
Money board if you want actual serious answers.
Posted on 1/9/17 at 8:34 pm to BengalBlood81
I've been listening to the Art of the Deal on my drive across country, so I feel uniquely qualified to answer this question
The best choice here is to make a great great deal, and that is one that you make a ton of money off of. Do whatever that is and you will have done well.
You're welcome
The best choice here is to make a great great deal, and that is one that you make a ton of money off of. Do whatever that is and you will have done well.
You're welcome
Posted on 1/9/17 at 8:35 pm to BengalBlood81
Unless you've already got your builder, floor plan, construction costs and everything lined up and ready to go, buy the lot cash if possible. That way you get transaction involving a seller out the way without delaying, you own the lot outright and can take your time choosing the right builder, floorplan, etc
Posted on 1/9/17 at 8:36 pm to BengalBlood81
As I understand it; say you are building a $500k home. This 500k value will be the appraisal pre build of the house and property together. Depending on your income and credit situation the bank will want some amount down. Let's say 10%. So you need either 50k down or you need 50k worth of equity in the property you own. Or you need 25k in cash if you only have 25k in equity.
Posted on 1/9/17 at 8:37 pm to BengalBlood81
You'll save some closing costs if you don't need to purchase the lot first.
If the seller of the lot can wait until you have everything together go for the lot & construction in one.
If the seller of the lot can wait until you have everything together go for the lot & construction in one.
This post was edited on 1/9/17 at 8:40 pm
Posted on 1/9/17 at 8:43 pm to BengalBlood81
The less you borrow the less interest you pay.
Posted on 1/9/17 at 8:57 pm to Martini
Pay cash or finance the land separate. This allows you to use the combined appraisal value as the home value. If you do them together, the total loan/construction cost will be used as the value.
The first draw from the construction loan will be to pay off the land loan.
Posted on 1/9/17 at 9:29 pm to BengalBlood81
buy lot cash. one less interest paying draw
Posted on 1/9/17 at 9:51 pm to BengalBlood81
Depending on the house you're building you may want to buy the land first. The house we are looking to build is over the threshold for normal construction loans meaning they are only lending us a certain amount for the construction and it doesn't cover all our expenses.
Had we included the lot in the construction loan we would have something like 7+% interest through the construction part instead of the 4.5 we are getting
Had we included the lot in the construction loan we would have something like 7+% interest through the construction part instead of the 4.5 we are getting
Posted on 1/9/17 at 10:09 pm to TennesseeFan25
quote:
I've been listening to the Art of the Deal on my drive across country, so I feel uniquely qualified to answer this question The best choice here is to make a great great deal, and that is one that you make a ton of money off of. Do whatever that is and you will have done well. You're welcome
Posted on 1/9/17 at 10:13 pm to BengalBlood81
The only answer is its up to you. Do you like having disposable income (savings), or do you want to save money on interest(overall loan amount). The factors are way to many for anyone to give you an answer. Do you have 9 months of bills saved not included purchase price of land? So many variables.
Posted on 1/9/17 at 10:19 pm to BengalBlood81
Yes.
Get a contractor that likes cash money and make bank. Contractor will quickly make his invoices 20% less for cash payment.
Get a contractor that likes cash money and make bank. Contractor will quickly make his invoices 20% less for cash payment.
Posted on 1/9/17 at 10:20 pm to BengalBlood81
How do you spell money talk
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