Hi, wanted to see if I can get some clarification on using our land as equity as down payment when applying for a construction to perm. loan and make sure I am understanding it correctly:
We are looking at building a home through a local builder for $182,000. We bought our land approx. 4 years ago for $17,000 (7 acres) and we will have to pay off $10,000 with the loan. We have since done upgrades such as driveway, rough grade and electric pole placement ($3,150.00 spent on those upgrades). My lender will loan 85% of the cost to build with no pmi.
182,000 + 17,000 (land) = $199,000 (cost to build) *not sure if I use what I paid for land or land value today(?)
169,150 (85%)
169,150 (85% cost to build)
195,000 (total needed) = 182,000 (home) + 3,000 (closing cost) + 10,000 (land payoff)
25,850 - 7,000 (land equity) = cash to closing $18,850.00 (??)
*I'm sure my land is worth more now but I have no idea what the bank will value it at so using what we paid.
Am I figuring this correctly ??
182000 | 169,150.00 |
17000 | (195,000.00) |
199000 | (25,850.00) |
land equity | 7,000.00 |
cash at closing(?) | (18,850.00) |