100% LTV Lenders
Looking for opinions on my situation.
We are going to be building a 2nd house on property that is currently appraised at $500,000. Current 1st mortgage is $268,000. Current HELOC is $55,000. Total of $323,000.
We have obtained bids for the owner-builder house to be around $250,000.
We are trying to be smart in limiting the amount of fees that we pay to lenders, i.e., loan origination fees, broker fees, etc.
We have some options that we want to run by this forum....
Option 1
A. Are there lenders that do 100% LTV HELOCs where we could borrow $232,000...$55,000 to pay of the first HELOC and then the $177,000 that we have in equity? I talked to a bank today that said they only go up to $100,000 in 100% loans. The rates for HELOCs are really good right now, that is why we are considering one.
B. We have two rental properties that we are selling where we would pay the capital gains taxes and the 25% recapture of depreciation. This would give us about another $38,000.
C. Then, the final portion would come from borrowing from our 401k's for the remainder.
D. The theory is, because it is owner builder, we could take up to 2.5 years to build the house (County rules). At the end of the 2.5 years or whenever we complete, we would refinance the entire amount and pay back the 401k's immediately and only pay one set of closing costs.
Option 2
A. Obtain a construction loan that requires loan origination fees, broker fees, some banks require a general contractor, 12 months for construction (some 18 months), contingency amounts (not always bad I admit), inspection fees, and other requirements. And then another closing at the end. I do know about combination loans where the construction rolls into a permanent loan.
B. Conduct a 1031 like-kind exchange for the two rental properties and avoid the capital gains taxes.
C. Leave the 401k's alone.
Both options have there attractions, so, any ideas are welcome. Thanks, Steve
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