What Do I Do Next??
Here is the situation. I have a contractor that can build me a home 150,000 for 110,000 with the land in most occasions. The snag I am coming up with is that I need to buy the land first, the mortgage company says I need to come up with 50 percent of the loan amount for the land, but they can do the construction part of the loan. What do I do next to get this going. I see at least a 25,000 spread, I probably wouldn't sell it for 150,000 unless it was on demand, I would try to get it off my hands rather quickly around 135-140. Any comments and questions would be highly appreciated. Also this guy has many references and has done this many times, so he is very good.
Matt Willand
Home Dreams 4 You, LLC
Couple of questions.
50% LTV seems low. Have you checked with other lenders? What's the land cost? Are you saying that the house on the lot would sell for $150K? I don't understand your statement "build me a home 150,000 for 110,000 with the land."
If the contract is that good, see if he'll buy the land and you can spilt the profit somehow to ensure he watches his budget and the home passes inspections.
Put him to the test. If he's good, he'll come to the plate and be your partner.
Quote:
On 2004-02-19 23:55, Jamesajohnsonjr wrote:
If the contract is that good, see if he'll buy the land and you can spilt the profit somehow to ensure he watches his budget and the home passes inspections.
Put him to the test. If he's good, he'll come to the plate and be your partner.
Hello James,
A contractor can be good and yet not have the money to put up for the lot cost or want to take the risk of the investment. Many builders choose to do only those homes they have under contract. Not that I'm bashing investors that want to build a home to sell, but perhaps if this is the avenue they want to take why not learn a little more about construction and become a licensed builder......
Hello Matt,
I agree with Nancy as 50% seems really low. There are lenders out there that will finance more than that. Are you trying to get the loan by yourself or is the builder assisting you? If you are trying to get the loan yourself just to sell the home the chances are the banks will make it tough for you as spec lending is getting harder to obtain and without being a builder it's that much harder. Look up IndyMac on the web as they might have a better program....
The home will appraise for 150,000. What the contractor and the mortgage broker have told me is that I have to buy the land first, then when I have the land we can get the constuction loan for the house. The mortgage broker said I have to come up with some money for the land and we can use it to help finance the house. Thanks for all the great information on this. Keep the advice coming, I am new to this and I want to be able to get things going, but want to be cautious first.
Matt Willand
Home Dreams 4 You, LLC
Find a better mortgage broker. I know it's not what you're looking for but there's no need to have to purchase the land prior to obtaining the loan as this can all be accomplished through one loan with the right broker. I am suprised your builder isn't aware of this. Good Luck!