If I paid all that and the bank is not disbursing the money after the first phase is completed . With what money the first part of the construction is done ?
Great video Couple questions: 1. Can I get the foundation done and then apply for the loan ? 2. Is it possible to set up the for the bank to handle all parts of the build and at any moment can I pay for a part of the project myself and not take a draw from the bank. Like if the roof is 40k and I can personally handle that at the time and not pull from my loan. Thanks for any help
Thank you. Most lenders have a process for verifying work started and/or completed prior to commencement of the construction loan. Some lenders are more restrictive than others in terms of their willingness to lend on a project already started so check with your specific lender. You should be able to contribute additional cash during the loan process but lenders will vary here as well. Consruction lending is very niche so always best to pick a lender and ask specific questions. You can find a lot of great brokers in your area at mortgagematchup.com. Be sure to confirm your broker has construction loan experience. Blessings!
Your video is very helpful. We own our land and have been saving for about two years to cover soft cost and hopefully have enough for the foundation. Typically how many months does the lender give you to complete the home? Thank you
Hi. Loan terms will vary depending on lender and scope of the project but 9 months is pretty typical, longer if you are building a larger home. Be sure to connect with a lender before starting any of the actual building (e.g, foundation work) as many lenders shy away from projects already started. Soft costs are fine. Go to mortgagematchup.com and find a great broker. Be sure to find one with construction lending experience.
In terms of the equity requirement for the loan, would those cash outlays that are considered reimbursable be included in the determination of whether you have the appropriate equity amount. IE: going for a $1m construction loan (80% D/E), I have $300k to start, I outlay $200k before construction loan closes (land, permit work, design etc), let's say $100k of that is determined to be reimbursable w the construction loan, would the lender say this person has $200k of equity ($100k remining in cash + $100k worth of reimbursables) as a result meeting the D/E ratio? Hopefully makes sense
I think you are reading that right. Work out the specifics with your specific construction lender as they all have their own prepaid policies. Find a great one at mortgagematchup.com
My VA construction loan broker is trying to add P&I to my loan as payment during the construction period. I had to get them to remove the tax and insurance. But financing principle during the construction period makes zero sense. It's double interest if you ask me
Hi. That is odd based upon my experience. Won't be double interest as it will pay down the principal balance during construction and not go to interest.
@@MortgageMasteryTheater On a VA construction loan the payments during the construction period are wrapped into the loan for a true 0 down, 0 out of pocket loan. They're taking what I would be paying and adding it to the total.
I’m selling two rental properties for the start up money, one in 2024 (already under contract) and one in 2025. Staying in our current home until we get the COA. Just trying to figure out how that is going to work with interest payments. We just closed on land for cash and have about $50 left to get started till first rental sells. So we will likely have some interest payments. And then next year give another chunk to the bank. Should I wait till we can sell all rental properties ?
Hi Leighanne. Sounds like a fun project. The cash you will need for the project includes any of the building costs that are not covered by the loan amount. So, paid cash for land and need 400 to build including loan costs, permits, etc. if your loan amount is 300k, you will need to deposit 100k with the lender at closing - right at the the beginning of the building process. After that, you will need to make interest only payments on the outstanding balance of the loan every month plus real estate taxes and insurance as they come due. Hard for me to say how that fits in overall with your sales plan. Go to mortgagematchup.com and find a good broker with construction lending experience and they will walk you through it. I am licensed in WA and ID. Blessings.
@@MortgageMasteryTheater giant thanks for information. We’re building outside of Denver in the foothills. We are able to do this as ‘regular people’ because of years of smart decisions, a little more than 50% cash at the end. I am a jumble of nerves cause we are just getting started. I may need more than luck… lots of meditation … wooosaaa
Sorry. Not sure i understand the question. You would need to own land to build on it (unless building on leased land which very few lenders will do). You can buy land with a construction loan but that takes a patient seller and a willingness on your part to invest a lot of money into the project for plans, permits, etc before owning land.
I own my lot I got my plot plan grading plan done I got my house blueprint done. But it's in a rural area. I got access to gas, sewer, water, electric. I need 300k construction loan, house will be worth 550k when done. What's my cost to get a construction loan?
If by cost you mean closing costs, that depends on the lender. Go to mortgagematchup.com and find a great mortgage broker in your market. If you mean how much cash you need to bring to the deal, I suspect none if you only need 300k and don't have an liens on the lot. 300/550 is about 55% loan to value and every lender I know will go that high on a construction loan.
Thank you so much for breaking this down and making it understandable!
Glad it was helpful!
If I paid all that and the bank is not disbursing the money after the first phase is completed . With what money the first part of the construction is done ?
Great video
Couple questions:
1. Can I get the foundation done and then apply for the loan ?
2. Is it possible to set up the for the bank to handle all parts of the build and at any moment can I pay for a part of the project myself and not take a draw from the bank.
Like if the roof is 40k and I can personally handle that at the time and not pull from my loan.
Thanks for any help
Thank you. Most lenders have a process for verifying work started and/or completed prior to commencement of the construction loan. Some lenders are more restrictive than others in terms of their willingness to lend on a project already started so check with your specific lender. You should be able to contribute additional cash during the loan process but lenders will vary here as well. Consruction lending is very niche so always best to pick a lender and ask specific questions. You can find a lot of great brokers in your area at mortgagematchup.com. Be sure to confirm your broker has construction loan experience. Blessings!
Great outline review.
Thank you!
Your video is very helpful. We own our land and have been saving for about two years to cover soft cost and hopefully have enough for the foundation. Typically how many months does the lender give you to complete the home? Thank you
Hi. Loan terms will vary depending on lender and scope of the project but 9 months is pretty typical, longer if you are building a larger home. Be sure to connect with a lender before starting any of the actual building (e.g, foundation work) as many lenders shy away from projects already started. Soft costs are fine. Go to mortgagematchup.com and find a great broker. Be sure to find one with construction lending experience.
In terms of the equity requirement for the loan, would those cash outlays that are considered reimbursable be included in the determination of whether you have the appropriate equity amount. IE: going for a $1m construction loan (80% D/E), I have $300k to start, I outlay $200k before construction loan closes (land, permit work, design etc), let's say $100k of that is determined to be reimbursable w the construction loan, would the lender say this person has $200k of equity ($100k remining in cash + $100k worth of reimbursables) as a result meeting the D/E ratio? Hopefully makes sense
I think you are reading that right. Work out the specifics with your specific construction lender as they all have their own prepaid policies. Find a great one at mortgagematchup.com
My VA construction loan broker is trying to add P&I to my loan as payment during the construction period. I had to get them to remove the tax and insurance. But financing principle during the construction period makes zero sense. It's double interest if you ask me
Hi. That is odd based upon my experience. Won't be double interest as it will pay down the principal balance during construction and not go to interest.
@@MortgageMasteryTheater On a VA construction loan the payments during the construction period are wrapped into the loan for a true 0 down, 0 out of pocket loan. They're taking what I would be paying and adding it to the total.
@@chadd587 I guess I'd have to see the disclosures to understand what they are doing.
I’m selling two rental properties for the start up money, one in 2024 (already under contract) and one in 2025. Staying in our current home until we get the COA. Just trying to figure out how that is going to work with interest payments. We just closed on land for cash and have about $50 left to get started till first rental sells. So we will likely have some interest payments. And then next year give another chunk to the bank. Should I wait till we can sell all rental properties ?
Hi Leighanne. Sounds like a fun project. The cash you will need for the project includes any of the building costs that are not covered by the loan amount. So, paid cash for land and need 400 to build including loan costs, permits, etc. if your loan amount is 300k, you will need to deposit 100k with the lender at closing - right at the the beginning of the building process. After that, you will need to make interest only payments on the outstanding balance of the loan every month plus real estate taxes and insurance as they come due. Hard for me to say how that fits in overall with your sales plan. Go to mortgagematchup.com and find a good broker with construction lending experience and they will walk you through it. I am licensed in WA and ID. Blessings.
@@MortgageMasteryTheater giant thanks for information. We’re building outside of Denver in the foothills. We are able to do this as ‘regular people’ because of years of smart decisions, a little more than 50% cash at the end. I am a jumble of nerves cause we are just getting started. I may need more than luck… lots of meditation … wooosaaa
What happens if you dont own the land?
Sorry. Not sure i understand the question. You would need to own land to build on it (unless building on leased land which very few lenders will do). You can buy land with a construction loan but that takes a patient seller and a willingness on your part to invest a lot of money into the project for plans, permits, etc before owning land.
I own my lot I got my plot plan grading plan done I got my house blueprint done. But it's in a rural area. I got access to gas, sewer, water, electric. I need 300k construction loan, house will be worth 550k when done. What's my cost to get a construction loan?
If by cost you mean closing costs, that depends on the lender. Go to mortgagematchup.com and find a great mortgage broker in your market. If you mean how much cash you need to bring to the deal, I suspect none if you only need 300k and don't have an liens on the lot. 300/550 is about 55% loan to value and every lender I know will go that high on a construction loan.