Lot Loan Question

[Anonymous]

Hey guys!

After much lurking, I finically decided to just ask my dumb question.

I purchased a lot in preparations to build a house. My lot loan was for 24 months and I’ve been only paying the interest for the past 12 months.
My question is, what happens after 24 months? Am I suppose to refinance it? Or pay off the 70k balance outright? What is expected of me?
This was my first big purchase (besides student loan but that’s another story), so I was intimated to ask too many questions.

Thanks for any help!

[CreditInspired]

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@Anonymous wrote:
Hey guys!

After much lurking, I finically decided to just ask my dumb question.

I purchased a lot in preparations to build a house. My lot loan was for 24 months and I’ve been only paying the interest for the past 12 months.
My question is, what happens after 24 months? Am I suppose to refinance it? Or pay off the 70k balance outright? What is expected of me?
This was my first big purchase (besides student loan but that’s another story), so I was intimated to ask too many questions.

Thanks for any help!

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First, dont be intimidated and you should ask as many questions as you need to. How else would you know if you dont ask?

Second, you need to pull out your loan docs and read them. Every loan is different. The loan docs will spell out the terms of your specific loan. 

So, if it’s a balloon loan, there is a

possibility that the loan amount is due in full at the end of the 24 months. If that’s the case, you might want to start research refinancing at the 18-month mark. 

If your loan is through a private seller, you may be able to redo the terms for a 

new loan. 

When are you preparing to build? What was your reason for doing interest only (the lower payments)?