Goin for a Construction loan....help needed

[Poohbear]

Hi all..Where is the best place to get a const. loan as I want to be the general contractor.  I am not a licensed contractor. Mid scores are high 660's have $15,000 in the bank $22,000 in 401K

We have already purchased the lot with 5% down. (paid $57,000, owe $50,000) our combined income is 95K a year.  We only have a $700 a month car payment.  (we currently have a $1,000 mo. mtg pymt but are going to sell soon)  CC's will be paid off before we apply.

 Had a bk discharged in 03 and perfect pay since....except 1 CA (medical) that we were unaware was out there and pd it off last month but it is dated 09/06 on CR.  We tried to dispute...no luck...we asked if we could do a PFD...nope, they said if we didn't pay they were going to sue..the amount was $355.00...So, we paid it right then! Time at job 14 years...DW has only been at current job for 17 months.  She has been in the same industry for 4 years but had a break between last job and current job (for one year) to take care of our sick daughter (who is in remission...YEA!!)

Any chances of qualifying???? Thanks so much

BTW...we are hoping to qualify for $375,000 to pay off lot and construction cost. 

[ShanetheMortgageMan]

IndyMac has an owner-builder construction loan program but it requires a 680 credit score, and 5% down on the total project costs (the amount you've put down on the lot can be part of the 5%).  The owner-builder program requires you hire a site supervisor who is a licensed GC, but does not have to do the GC responsibilities.  Debt ratio might be on the high side for a $375k loan amount (a bit over 45%), but it's close so it'd be worth a shot... not sure if you figured in the fee that a site supervisor would charge though.  Your reserves should be enough, but the recent collection on your credit post-BK would be looked at negatively.  Since the loan is approved via automated underwriting (comprehensive analysis of your situation), you would just have to take the plunge in order to see if you'd qualify.  I suspect once you pay off the CC's the score will likely go to a 680 level.  But be aware if the collection hasn't updated since it's been paid off, it might actually drop your scores because now the date of last activity is recent rather than 9/06.

[Poohbear]

Thanks Shane, 

The collection is in DW name only...and again she has only been at her job 17 mo's is this a problem?  Any other banks do Const. loans?  Indy told us 680 scores and 10% down down...they have changed requirements since the mortgage crisis. Current CR show the collection now pd but still dated 09/06. Any way to get them to remove it?  How have you come about the above 45% we are getting a different # on mtg calculators.  Can you recommend a good website for a mort. calculator? 

Thanks sooo much!!

[ShanetheMortgageMan]

The time on the job for 17 months would have to be approved via automated underwriting, so that would be the only way to know for sure.  Likely it would be OK though.  According to my guidelines IndyMac is still OK with 5% down if you can document income... but does require that 680 score, and 9 months PITI in reserves after down payment.  Not sure who else permits owner-builder programs other than Bismark, but Bismark requires much more down than IndyMac.

You don't need a web calculator to calculate your DTI, you just take all of your minimum monthly expenses (car payments, credit cards, student loans, personal loans, 401k loans, alimony, child support + the new mortgage payment) and divide it by your total monthly income.  The big variable in the equation would be the new mortgage payment, because the only way to figure that out is to know the exact loan amount, interest rate, estimated property taxes/homeowners insurance and PMI (since LTV would be over 80%).

Only way I know of to get a collection off of credit is a pay-for-delete (PFD).

[Poohbear]

Thank you, thank you Shane...Got a couple more for ya.....I think I know the reason we are getting a different back-end ratio (you mentioned it was just above 45%)  We are counting on the insurance to be around $600 a year and the taxes ($1250) on the lot only (for the first year)  Do banks guesstimate (using a certain percentage) to what the taxes will be on the finished home when figuring DTI?  Homes in the neighborhood we are going to build in are $6000-$11000 annually, we figure ours will be approx. $7800 (the 2nd year we are in the home)  The first year of taxes should only be on the value of the home in various stages of building...am I correct? 

Now I am concerned!!   Hope you can help me here!!

Thanks for the help so far!!!

[ShanetheMortgageMan]

Typically construction lenders will use the anticipated property taxes after the home is built.  I know when I've done IndyMac's construction loans they use a flat percentage of 1.25%, unless I can confirm the property taxes will be less.  In some situations they've asked me to call the county tax assessor and get the formula for calculating the property taxes, it appears in your situation that the taxes will be in excess of 2% of the finished value, I was playing it more conservatively at 1.5% (since I didn't know where you were building, is it in TX?).

[Poohbear]

Thanks Shane,     Nope we live in Illinois....taxes are outrageous!!  I have called around to a few local banks...seems we can qualify with our scores, but the back-end is going to kill us because they call the tax assesors office to get a guesstimate.  When you take into account the guesstimated taxes it does take us to the 45%.(UGHHH)  I haven't had anyone pull credit yet...I gave them our scores and info...we won't actually need to apply until March and I don't want the hard pulls on our CR.  I called and spoke with a rep at Indymac...they said mid score 680 for both applicants and 10% down for an owner builder construction loan.  Guess we won't be using them.  Thanks for your help Shane, I may post more ?s later for ya.