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@Gstew wrote:
I own two acres of land and the wife and I are wanting to build! Has anyone here gone through this process? I'm not sure what type of loan I would need. I'm also in a community property state if that matters. My scores from SW are 625 and no collections except medical. Anybody have the 1-2-3 on this? TIA
Best suggestion is a construction loan with the land offered as collateral which would then roll into a normal mortgage after completion, but with your scores, it might be difficult to obtain.
@Gstew wrote:
Thanks for the advice!
No problem. Be aware that banks usually want to see detailed plans and exercise approval to some degree over the contractors used.
In other words, there usually isn't much room for sweat equity in a construction loan. You'll typically have to take a set of plans to the bank, which they will have to approve, and submit the contractor's information as well. It can be complicated, but in your situation it could work. The kicker will be how much of the value of the improved property the land will represent as collateral. If that percentage is pretty high, it can sometimes convince the bank to extend a construction loan that they otherwise might not do. YMMV
@Gstew wrote:
My father is a general contractor. He would be the one to oversee everything.. We've found two different floor plans that we like. The land has to be cleared and surveyed still but I believe it's worth at least 30-40 thousand for the two acres but that's just going by the trends I see around town. Looking to build around a smidge over 2000sq ft ~170,000
I would be the only one on the loan as my wife is a stay at home mom. I make 50k salary
As long as he is licensed, I wouldn't see a problem with using him, but your bank may disagree due to the potential conflict of interest.
You'll also be able to sell the timber and use that money to offset construction costs or buy down the needed loan amount.
Best suggestion is to shop the deal to the lenders that you have in mind. They can tell you with specificity whether it is doable or not.
Best of luck with this. Hope it works out for you!
my guess is that you will likely do best with one of the big banks.
those scores are pretty low for construction financing.