LS1TRUCKGUY

iTrader: (7)

im just doing some research on the whole loan process to make sure im up to par when im ready to start building my home. anyone here that has been through this? anything i should watch out for? any tips are much appreciated

dmelvin

iTrader: (8)

I'll give my brother a call this evening when I get back from working out. He's worked in loans/finance for a decade now.

LS1TRUCKGUY

iTrader: (7)

cool man

1slow01Z71

iTrader: (36)

Thats a pretty broad question. Basically:
Dont make any big purchases 6 months prior to signing your contract to build
Make sure youve had your down payment money for 3 months or longer
The bank is going to drive you nuts asking for all kinds of stupud BS
Do not let the builder get away with anything
Any agreements you come to get them in WRITING, NO verbal stuff
Go through a credit union for your mortgage, theyre cheaper and easier
Keep your debt to income ratio as low as possible but its better to have the vehicle note than exhaust your savings paying it off
Remember itll be worth it in the end

I bought my house as a repo and my best friend built his within the last year so Im fairly familiar with the process.

LS1TRUCKGUY

iTrader: (7)

cody,
im familiar with all of that, this wont be my first house to finance. more specifically, i was asking the ins and outs of a construction loan in itself, like closing costs associated, and how they differ from a normal home loan, and what closing costs are associated that will have to be AGAIN when i do the permanant financing after the house is complete, what are good interest rates for a construction loan, if they differ any from a conventional loan, how does the interest work on a construction loan since its basically a "short term" loan(3-4 months build time) etc

CC05

iTrader: (2)

I covered this pretty extensively in another thread. If I can find the thread, I'll post it up.


Anyways, number one (and a half) rule: If you go through a bank, after essentially being interrogated, you are most likely going to be "approved for/offered" much more money than you can actually afford. Don't fall for that ****. Period. Work your own numbers, and make sure contractor(s) stay tied to a certain time frame. I know a lot of guys that have went on the word-of-mouth basis, when it came to the famous "I'll have it done by next week" bullshit, and the project ran over, both in cost and time. So, like Z71 said, get agreements in solid, clear writing.

1slow01Z71

iTrader: (36)

Depends on who is building it. If its a large contractor its basically the same as purchasing a house thats already built. Only difference is, you wont be able to lock in your final interest rate til damn near time to move in. Right now a good interest for 30 year fixed is 4ish and if you can swing a 15 year you can get in the mid 3s through the credit union I use. Theyve got pretty good rates though.

The only time doing a home loan changes really is if youre building your own place and you take "draws" off the loans. Which in that case you have to supply proof youre using the draws for building. Its just like bank audits on commercial construction.

Closing costs again depend on the builder, some eat a lot of the BS charges and also depend on if youre financing through them. Need more details on what youre doing, whos doing it and what exact type of loan youre doing. A construction loan is for if youre building it yourself or hiring an independent contractor. If youre using a big name track home contractor youre loan is no different than a conventional EXCEPT your interest rate is locked in later.

LS1TRUCKGUY

iTrader: (7)

i will not be using a large volume homebuilder. i am finding a lot, and having the home built on it. i have taken a few builders into consideration, with one that stands out the most. they are a small volume home builder that builds less than 20 homes per year. Also, im having a hard time deciding if i want to pay the property off, and use it as colladeral, or roll it in with the cost of the house and use the money as a large downpayment. there are positives and negatives to doing it both ways

1slow01Z71

iTrader: (36)

Do whatever allows you to not pay PMI, that's a wasted 75+ bucks a month that only protects the bank NOT you. It might be worth it if it covered your *** if you defaulted but it just protects the mortgage company.

If the builder is an established licensed contractor you shouldn't have a problem. You will have to get the design appraised though. Depends on how the contractor wants to do it as to whether or not you will have to do a draw or straight mortgage.

Once you get into actually breaking ground post up, I can give you a few pointers on the foundation to look for.

black4.8

iTrader: (1)

my construction loan was 5 yr fixed.