MrsGordo is right on. I just got through going through that process. From my experience, hardly anyone does any 1-time construction permanent loans anymore. I called around to about 8-9 local banks and a few internet based mortgage companies and all of the internet based places said, "We don't do one-time close, your best bet is a local bank." Well, all of the local banks said they don't do that anymore. So, I had to go with a separate interim construction loan, at that point...its just shopping the different rates/closing costs. It varied so much. Some banks charge a point, but if you use them for permanent they credit that back to you. Some of them told me flat out, if they can't get the permanent they don't want to mess with the interim (Since they don't make very much off the interim). The bank I wound up using was referred to me by my builder. He uses them, and has referred other clients to them and never has heard anything negative. I wound up going with that bank, and it really worked out well for me. They had the best rate, no points (which allows me the option of shopping the permanent), and also they have a relationship with my builder already. So he knows what they need, and they know he does quality work and finishes on time and in budget. My interim construction loan also encompassed the purchase of the lot. So based upon my total loan amount, the amount I put down paid off the lot and put some in the balance of our building account. Now, if we can just get some DRY WEATHER Q#$(#$@#$!!, we can actually start and i'll start making draws and paying the interest. So, i'm not sure how it'll work with you buying the lot so far in advance of building. I would call around to some local banks and get some ideas from them. Make lots of notes on who you talked to, the rate, any points charged, application fees, etc so you can look back on the big picture and see who has the best overall terms for your situation.

Laura, So sorry you are having a tough time finding a CP loan. I do understand what you are going thru since we went thru very similarly hard time finding our CP loan. Next best advice is to lock into an ARM with the lowest possible fees and that will cost you the least in interest during construction, no matter what the final rate is. Then, figure out who you will be using to refi to a Fixed and have them help you keep a VERY close eye on the rate market. If they start to rapidly deteriorate, you can lock into a long lock period for a Fixed rate refinance ... you will go ahead and be underwritten and will close on the refi into a Fixed as soon as your construction is finished. This lender or broker needs to be someone who has access to Mortgage Baked Securities market that they can monitor the movement for you. Rate lock periods can generally be for up to 60 days. Some lenders will allow 90 day locks. Other lenders will allow even longer lock periods with an upfront fee. Keep in mind .. As a general rule, the longer your lock period, the worse the rate at the same origination cost. I.e. If you are paying 1% origination

Thanks for all the info! It was a hard step to take out that equity loan because I knew that it is eating up the house. But I really saw no other alternative. I think I will call the CC that are sending me the "interest" bills to make sure I can get them paid off in 1 sweep. [Interest on a $20 balance that is never going to get paid off? That's the problem if I can't get an exact amount on an exact date].I am hoping that by doing this we'll have more $$ to put towards the equity loan and mortgage to pay them down-even if it's only a little bit each time. I do pay all my bills online (i.e. electronically) through their websites. I found out the hard way a few yars ago that to try to set it up from my bank that even though I put in the date I wanted something paid - it wasn't until the company came and "drew" the $$ (that the bank had put a hold on) which made a few bills late-took up to 5 days. So by paying them though the company's site I get a payment date on the date I request. I didn't set up the bi-weekly mortgage though Wells Fargo (even though they were offering it free) becuase I didn't want them "holding" my $$ for 2 wks until the 2nd draw then pay to the mortgage. I now am putting it in a separate bank account and I will electronically pay it each month-with me deciding to add the extra. (And this way if I can't afford extra the $$ is there for my emergencies). [Like the $432 vet bill for one of our dogs this week-unexpected illness yuck!] RA

A bank has to be able to recoup their investment if you default on the building or mortgage loan . They are not going to loan you more than the home is worth, even if it costs more to build than you think it will at the beginning. When you apply for a construction loan, banks have to appraise (educated guess) the home value of the as proposed to be built house in order to approve your building loan. At the end of the build, to turn that into an *actual mortgage*, they review the home value again. They loan 80% of that As Built value, so you bring 20% to put down. So if you’re building a “500K house”, you bring 100K to the table, and the bank loans you 400K. And you build and bring that 100K to closing and live happily ever after. Simple? Nope. If that house costs rise that 15% (75K) contingency, then you have a 575K house, right? Nope. You most likely have a 505K house after the build, and the rising value. And you’re bringing 171K to the table, because they are only going to loan you 80% of that 505K (404K) . Houses that cost more to build than they appraise for, have to have cash reserves to pay the overage. Or the bank ends up foreclosing and owning them. Any discrepancy between the cost to build and the appraisal has to be resolved at closing. If the bottom drops out of the market rapidly, and the end result only appraises for 450K, then the bank will only loan you 360K, and the house still costs 575K to build. That’s 215K you bring to the table. Conversely, if the value of the “500K house“ rises 90K in a wacky market, and it’s worth 590K, then they’ll loan you 472K, and you only have to add 18K to that 100K down payment. Don’t count on that. This isn’t a market to build in with a squeaky tight budget. You could lose the house and the money if you don’t have enough cash reserves to take care of overages and changes. Play with your real world numbers. The magic figure is that 80% of appraisal value, no matter what the cost of the house is. The house could cost you 1M and only appraise for 500K. And you’d need to bring 600k to the table.