New construction loan? Who's done it?

[skooter_built]

I've been in the house buying mode for the last 2 years and have had no luck why it come to becoming a home owner. I'm thinking about saying f' it with buying someone else's property and dealing with bidding wars and having someone else fix **** or remodel so the idea of getting a construction loan came to mind however I don't have the slightest clue where do get info or advice. Who's done it? Can you roll in a property purchase, house build and say a pole barn along with house mechanicals? Just exploring the thought. What can and can't you do?

 

[sickjuice]

You need lots of cash or equity.
Or a homebuilder/contractor that is willing to buy the land and finance the project till you can get a mortgage on it

 

[koditten]

Ha, ha. I was thinking the same thing. If house shopping alone is giving you a headache, wait until you have to deal with contractors. All those questions and discisions coming at you constantly is going to rock your world.

One word of advice. When you talk to the contractors, write everything down, what you said and what he said.

Sorry to get off topic. Morgage pro's are one of your first stops. If you have a contractor liscence it will be a bit easier.

KO

 

[dmeadow]

Ditto on the mortgage company for construction loans. They do what is called construction-to-perm or one-time-close loans.

You can also look for build on your lot ("BOYL") builders. Some will buy the lot for you, build the home, then transfer it at the end. Others work as contractors.

Having just built a house, I'll agree that building one is umpteen times more stressful than buying an existing home. Especially if you are picky.

 

[turbowoodworker]

I'm in the process as we speak. Will close on my loan next week and start clearing land. I can only speak about my experiences because I suspect there are way many ways to go about it.
I bought my land several years ago and it's clear so I come to the table with about one third equity in the project. I also have a wad of cash to add to keep the permanent loan payments down.
What I found is that the big banks that I had business arrangements with had little interest in construction loans. They are too small for them to make money on and way too much hassle to deal with...interest only loan, then conversion to permanent, lien releases, inspections for completed work, etc.
Found a small bank for the construction loan. But I will have to convert to a permanent loan via the secondary market as this small bank only has ARMS available and with my equity, I want to lock in at these low rates, assuming I can get done before the Fed raises rates next year.
This whole process so far has taken me close to tw years just trying to find the right contractor and plans and budget.
Hope this helps but as I said its just my experience and specific circumstance. Owning the dirt changes things bit.

 

[mechanic217]

Tried for a construction loan ,no one wanted to deal with an owner-builder so I sold a bunch of toys, borrowed on a 401K, borrowed against a CD and traded labor for labor, wasn't easy but when we finished and moved in we owed 5000.00 and that was all.I would do the same in a heartbeat and tell the banks to stuff it, not having a mortage to pay every month is very empowering and I have replaced the toys that left with better ones!

 

[cyamaha2007]

It was near impossible for us since we wanted to be the general contractor. We ended funding it out of pocket little by little. It was a pain but worth it.

 

[the_saint]

I am in the process of doing a build right now.

Had to pony up 25% of the total cost in cash.

The bank wanted a pretty detailed report of the finished product (on paper) to decide and justify the total cost to ensure they were funding a project that was 'worth it'.

But it has been pretty good so far.

 

[Chaz]

I got them for both my rentals and my home. I'm in the trades, but certainly not a building contractor (Finish carpentry & cabinets were my thing).
Its really a matter of your credit history and your bankers confidence in you, as well as your net worth.
If you are an unknown builder with no former relationship at the bank, I'm guessing NO would be the answer.

 

[Grumpy365]

I did it thru " Owner Builder Network"

Looking back, I could have bought cheaper than I built. I bet I would have been upside down when I went to permanent financing, if I hadn't have paid the unexpected problems and BS expenses out of my pocket. (the market collapsed during my year long construction)

Personally I don't think I would do it again. I am not sure the stress, time, year of my life, etc. was worth it.