Building a house on owner financed land, with FHA loan?
MissLeafy
10 years ago
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nostalgicfarm
10 years agokirkhall
10 years agoRelated Discussions
self-financing build while bank loan processes?
Comments (27)Holly, MFatt: The land is being sold by a third party, not the builder. The P&S is conditional on all the build elements coming together. It's a strange process. To buy the land, we need to be able to afford the house we want on it. (there's covenants stipulating the size/type of house that can be built. We couldn't build small then expand, for instance.) To know the cost of the build, we need a builders quote. But first the builder needs plans. Have to design plans with an architect. Pay the architect, submit to builder(s), recuperate from sticker shock, go back to architect and redesign, get another quote. When that's settled, need the bank to spend a couple months studying the documents from the architect and builder. Sigh. If I just had an extra half million dollars or so lying around, this could be much easier. Story of my life... ;) Anyway, our plan is (or was, depending on whether the bank allows it) is to file the loan application, and in parallel to it processing for us to close on the land, then pay out of pocket for the site work and foundation. Hopefully we can find someone at the bank who doesn't think this is an unusual occurrence....See MoreBetter to pay cash or get loan to build custom home?
Comments (38)So it's May 2015 and I am just joining this conversation with the same plans to build with plenty of cash to do it without compromising our retirement and other investments. I have already gained some new insights by reading everyone's comments here so thank you! We also have our current house almost paid off which will be used to recoup some of our costs when it sells. And like several of you, we don't want to sell and move two times so we'll wait until new construction is near completion. But something just keeps nagging me about having some kind of safeguard in case something happens along the way. We know and trust our builder, but hey, anything can happen expectantly along the way. So I Googled Beth's original headline and came across another blog that revealed something very reassuring to me. Everyone knows about construction-to-permanent loans, but how about just taking out the initial construction loan and then paying it off in full at the end with no permanent loan? The lender assumes responsibility for getting an accurate appraisal, inspections, approvals for builder draws and final title. A 12-month construction loan would involve miniscule interest costs for the peace of mind in return. And what say you? An inquiring mind wants to know!...See MoreFHA 203K (streamline) loan - Oh Dave...
Comments (21)I'm in the middle of a 203K project. In a nutshell it's been a horrendous ordeal. The 203K program is a great government program designed to help homeowners fix up existing structures, but all I can say is beware - In my experience our local governments aren't at all on board with the program... and neither are the banks now-a-days. The process involves lots of red tape, if you don't have the stomach for it, don't even cosider a 203K loan. Local Government: It took us 2 1/2 of our 6 months to get our building permit from the county. Needless to say we've had to file a program extension. With that said it would be great if the government provided homeowners with access to liaisons who would work on their behalf to speed the process along. Bank: We're having issues getting our draws from the bank. Our hud inspector is wonderful and has approved all of our draws, once they get submitted to underwriting etc... the bank keeps coming back to us requesting all kinds of additional requrirements and documentation. It seems that in the midst of the world's current financial crisis they're very hesitant about disbursing draw money so they feel that they can change the rules and requirements as they go. We're currenlty battling for our 3rd draw and overall I'd say we've easily spent about 2 months total time waiting for money. Keep in mind we pay for this money each month in our mortgage and have clearly met the requirements outlined in our scope of work. You either have to have REALLY understanding contractors who don't care when they get paid, or REALLY deep pockets to pay contractors/ or for the cost of repairs up front. For us, we've put out A LOT of money upfront and have only recouped about 15% of it. Also, one more thing they don't tell you... or maybe they do and it never sunk in for me. When they disburse draws, they always hold back 10%, just something to keep in mind if you need to pay your contractors....See MoreFinancing a new home renovation - Project Loans?
Comments (4)We only have 5% down because we are selling our current home, we have a good income and even with 2 mortgages we are not overdoing it. If our current home doesn't sell we will rent it out, it's a condo in desirable location and easy to rent - but it will certainly sell. This is actually a condo not a townhome technically but an end unit with no one above, below or to one side so in that way it feels more like a townhome. The comps for this property are about twice the list price of this home, it is in a desirable neighborhood and this area is a market not hit much by any slump and already regaining momentum. We're not asking for advice on our personal financial decisions or the wisdom of purchasing this home -we have all the details and we're convinced that it is an excellent investment as well as being a great place for us to live for a few years - so close to work for both of us. We have not had a home inspection yet as our offer has not been accepted yet, so we don't have the full details on plumbing electric etc but all the fixtures work and the faucets and toilets etc work. This will be our second condo purchase so we are very familiar with HOAs what to look for etc. We don't need guidance there. $25k is not very much in the context of the california housing market, LOL and the property post-reno will be worth more than an additional $25k. We will be able to repay the renovation costs within months of buying, it's just the time frame of down payment, closing costs, moving costs and overlapping mortgages etc that will not allow us to free up the cash to do the basic renovations before we move in. This is an REO not a short sale, close of escrow will be very fast. What I would like input on is the Home Depot and Lowes Project loan or other similar line of credit type home renovation financing (credit union personal LofC?). Have you used them, how were the contractors (you have to use theirs) etc etc....See MoreUser
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