Jul/10
17
what will I need to get a construction loan?
3 Comments · Posted by admin in construction loan
I own the land, asessed at $150,000. I have a upper 600 credit score, no debt and make $80,000 a year. I have around $50k in the bank. Will I qualify for a new home construction loan?
You should, but only 200k. You need to give them 25% down upfront, and with only 50k you are rather limited. You need to present them with your complete plans and general building permits as well, they will not give you a loan until you are ready to go. You have about 9 months to get it all done.
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Steve L · July 17, 2010 at 10:30 am
Check with your local banker the very least he can tell you is no. Nothing ventured nothing gained.
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Landlord · July 17, 2010 at 11:02 am
You should, but only 200k. You need to give them 25% down upfront, and with only 50k you are rather limited. You need to present them with your complete plans and general building permits as well, they will not give you a loan until you are ready to go. You have about 9 months to get it all done.
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loanmasterone · July 17, 2010 at 11:44 am
You should contact a mortgage broker about a construction loan. There are many that will get you a construction loan which upon completion of the construction converts to a mortgage loan without additional paper work.
Normally you have to have plans and own the land. Since you own the land you should not have a difficult time getting a construction loan. If there is any required down payment the mortgage broker will tell you.
Normally if you own the land that is considered enough interest in the project.
The other thing about a construction loan is that what you are building will be worth almost twice the price of the construction. So if you wanted to build a $200,000 home, the construction cost should be around $100,000 or so.
With that being a fact the lender would not normally want a down payment, because in actuality the lender is into the project for only 50% Loan-to-value (LTV)
The amount of home you will be able to build will be determined by the current price of homes in your area and what you are qualified for.
In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.
Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.
He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.
The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.
When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.
#1 One month of pay stubs for each person that will be on the mortgage.
#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.
#3 Two years of federal income tax along with the W-2 that match.
Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.
Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.
Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.
If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.
You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.
Make sure your mortgage broker explain all your options so you may make an intelligent decision.
What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.
So select the best option for you and your financial situation.
You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.
Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.
Your mortgage broker will now order an appraisal to show proof of the property value.
The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed.
After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.
Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.
I hope this has been of some use to you, good luck
"FIGHT ON"
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