financing for a new build
gwen
8 years ago
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cpartist
8 years agoUser
8 years agoRelated Discussions
Need advice on financing a future home build.
Comments (4)No one here can answer these questions. We're missing too much information -- and the necessary questions are probably things you don't want to share on a public message board: How much income do you have? If you're financially able to carry your current mortgage PLUS the new build, you don't need to sell your current house at this point. Do you have stellar credit so that the bank will be willing to lend to you under these circumstances? And a related question, what other debts do you have? I'm not seriously asking you to answer these questions online -- in fact, I think you shouldn't. But these are the things that'll matter when the bank is determining whether to lend to you....See MoreHow do we finance a build?
Comments (5)Do you mean the builder will finance the construction or the builder will finance the final mortgage? Those are two different things. The other thread you mentioned was a different scenario: essentially holding back the builder's paycheck. That's very different than earnest money which will be used as the down payment for the house. I can't imagine a builder financing the construction of a house for you without a down payment. Without that, he could sell it someone else. One warning--unless the builder is doing the final mortgage financing (and personally I find that hard to believe) you are probably months away from locking in a rate. The only time I've heard of a builder providing financing for the final mortgage was large national builders that had a financing arm of the corporation. This post was edited by rrah on Fri, Apr 4, 14 at 18:22...See MoreSelf financing a build + protection process? (Texas)
Comments (8)We have done one build, and are working on a second, where we did not obtain a construction loan (we basically used a line of credit loan, plus savings we already had). On our first, our builder was great and very trustworthy; my spouse was careful in reviewing invoices and payments. We were very relieved to not have a bank involved. On our current build, we've talked through this with the builder, but are comfortable funding the draws. Again, we will review all draw requests, associated invoices, lien releases, etc. They did suggest to us that for a fee, we could work through an escrow company, if we wanted. You could look into that....See MoreSelling old home while building new, please help me understand
Comments (15)A couple of follow up points... A bird in the hand is better than two in the bush. A sale today without marketing has real value. You will have access to the equity today and can use that money in the build and you will not have to worry about the difficulty of selling the home. Additionally, a sale without realtor's commission has real value. These two things give you some leeway to make a deal that nets out being better for both parties. You can give a discount because you are getting real value above the traditional sales method and if the buyer is flexible he can also get some real value. However, depending on the financial situation and your local real estate market, it is entirely possible that you will lose money doing this. You note that your house is paid off, but in a rent back situation you are going to have to make rental payments and probably at the market rate. It is entirely possible that given enough time or the right market conditions this will destroy any value you receive. ---- There are other options out there. Residential real estate has relatively few and pretty simple transactions, there are many other sales arrangements out there that are atypical for home sales but fairly standard in commercial real estate. For example, you might do an option contract on the property with a guaranteed sell by date. In that case he would pay you some amount today (usually between 5% and 10%), this secures his right to buy the property at a later date for a set amount. In a residential transaction that payment would probably be a credit toward the purchase if he agrees to complete the sale and would be held in escrow by the attorney. You agree that you will offer the property for sale no later than X date, but may offer the property for sale on any date before that with a 60 day notice (or whatever you are comfortable with). If he passes on purchasing that day he loses the money. Inspections would be done when the option contract is executed and you will have a refund period just like a typical contract but the final home sale wouldn't have an inspection or an appraisal contingency. He can still pull out at any time, he just loses the option payment he made. This protects him from things like a slowdown in the economy or a major loss of value on the home (he only risks the option payment he made), and incentivizes his going through with the sale. It also means you don't have to make rental payments. ----- I used to do options in rental properties quite often. Frankly, I just find the houses that look like they could use some money and offer them a few thousand dollars for the option to match any offers when/if they sell. Nine out of ten times they just call me up and ask for an offer before they even call a realtor and I get multiple properties close together over a period of a few years which really lowers my costs. Note: To relieve my conscience I only make fair offers, I am not trying to take advantage of people and although that certainly costs me money, I do sleep better at night. I despise those people who offer pathetic amounts of money to people in desperate situations....See Moregwen
8 years agoweedyacres
8 years agocpartist
8 years agolast modified: 8 years agoOttawaGardener
8 years agocpartist
8 years agoUser
8 years agolookintomyeyes83
8 years agoncrealestateguy
8 years ago
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