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Loan questions
Posted on 6/1/23 at 1:49 pm
Posted on 6/1/23 at 1:49 pm
Building a house and of course it is going over. I put down 20% when we bought the land and all for the loan. What would be the best course of action for getting a loan of some type? HELOC?
Looking for any options here. Kinda in a pickle
Looking for any options here. Kinda in a pickle
6
Posted on 6/1/23 at 2:39 pm to trident
I would go back to the bank that has the construction loan. Give them a breakdown of the change orders and cost over runs and ask them to order an updated appraisal. Then once that’s in get them to increase the current loan amount. It’s to the banks advantage to help you get the project completed.
Sometimes cost doesn’t equal appraised value (most of the time) on a dollar for dollar basis, but the appraiser should be able to squeeze some additional value there somewhere
ETA - you’re not going to get a HELOC as the value isn’t there yet. You’re building into the value (unless the home is already finished) so no lender is going to come behind a first on a home under construction.
Sometimes cost doesn’t equal appraised value (most of the time) on a dollar for dollar basis, but the appraiser should be able to squeeze some additional value there somewhere
ETA - you’re not going to get a HELOC as the value isn’t there yet. You’re building into the value (unless the home is already finished) so no lender is going to come behind a first on a home under construction.
This post was edited on 6/1/23 at 2:42 pm
Posted on 6/1/23 at 2:40 pm to trident
Are you being squeezed by the bank?
They usually build in a contingency for overruns.
Or is the builder that far off his estimates that he is really putting you in a bind?
They usually build in a contingency for overruns.
Or is the builder that far off his estimates that he is really putting you in a bind?
Posted on 6/1/23 at 2:45 pm to meansonny
Bank value was set for construction. I would have to reclose and get a new interest rate of 7% instead of the 3.75%.
And I have one year to pay the overage to the contractor, so that is why I was thinking HELOC. Once house is build, the value would be there.
And I have one year to pay the overage to the contractor, so that is why I was thinking HELOC. Once house is build, the value would be there.
Posted on 6/1/23 at 2:52 pm to trident
quote:
Bank value was set for construction. I would have to reclose and get a new interest rate of 7% instead of the 3.75%.
You are either going to need a re-appraisal.
Or you are going to have to speak with your local banks about HELOC. I don't think traditional mortgage lenders are going to be able to help.
Ask your construction lender if combined loan to value (2nd or heloc) is permissable with your original construction-perm. It may not be.
Posted on 6/1/23 at 3:11 pm to trident
Might have to go hard money until you can get in it and get a HELOC.
Ouch. Good luck, man.
Ouch. Good luck, man.
Posted on 6/1/23 at 3:29 pm to trident
quote:
And I have one year to pay the overage to the contractor,
contractor raking in the dough and just passes along all the overages to no penalty of his own.
Posted on 6/1/23 at 4:32 pm to trident
Do you have equity in your current house?
If so, bridge loan. It’s 11 months interest only and you can pay it off with the sale of your house.
If so, bridge loan. It’s 11 months interest only and you can pay it off with the sale of your house.
Posted on 6/1/23 at 6:45 pm to pwejr88
quote:
Bank value was set for construction. I would have to reclose and get a new interest rate of 7% instead of the 3.75%.
If they portfolio’d the loan and didn’t sell it on the secondary market then you don’t have to. You can just have it increased at the current rate if it hasn’t been sold to the secondary market yet. If it’s still under construction and you haven’t gotten the CO (cert of occupancy) then it hasn’t been sold yet.
Is your house complete?
What about having the contractor take a 2nd and allow payment plan to payoff. Usually contractors need your money to start the next job so that plan is unlikely, but you never know until you ask. If you don’t pay them the they’ll lien the property anyway so maybe they’ll take a 2nd.
Posted on 6/2/23 at 6:47 am to trident
The bank is looking to squeeze you into a higher rate - good luck
Posted on 6/2/23 at 12:32 pm to trident
If you need a bridge loan right now and can't get a heloc you can get one backed by your 401k. Will be 6.5-7.5%.
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