Home Loans to Build a House

If you don’t want to pay for things you don’t want in a home but are willing to pay for items that are important to you, building your own home might be the solution!  

My most recent Example.  4 years ago, my dad lived in Arizona.  We asked my mom to live with us and we were able to build a 1600ft2 home on our lot.  During construction she took me and my wife’s bedroom, and my wife and I moved into the attic.  18 months later she moved her stuff into her new home, and everything was great. 

It was a stick-built home and had everything she needed.  This allowed her to be close to any special needs she might have and has worked out perfectly.  Perfectly in that I don’t have to fly to Arizona for Christmas morning nor worry about her.

Example #2.  I am currently doing a loan for a past client.  He owns 12 acres with a 50-year-old mobile home on the property.  He owes about $180,000 and the build will cost $430,000.  He is tearing down the mobile and replacing it with a modular home that is nice.  In the last 2 weeks we have approved the builder, gotten the contract corrected to meet the loan guidelines, and are now in underwriting.   Overall, this will take a total of 5 months to complete, 2 months for permits and 2-3 for the construction.

This is a OTC (One Time Close) loan meaning initially is structured like a construction loan, which provide draws for the builder.  These draws help pay at different phases of the work being done.  Phase 1 might cover ground prep and the foundation and phase 2 might be framing and rough plumbing, electrical.  Once the construction is complete the loan converts to a normal 30 year fixed loan.  

OTC has the benefit of not having to incur the costs of 2 loans nor having to qualify 6 months later.  Rates, guidelines and the borrower’s financial situation may be different in 18 months and we want to avid that    

Here are the steps for a construction loan (OTC)

1. Family wants to build a home

2. Call your loan officer and get pre-approved

3. Find land

4. Find builder and give your loan officer (LO) the contact information of the builder

5. LO will submit builder to be approved and them registered with the lender.

6. Family designs the home with the builder to determine costs

7. LO completes a calculation questionnaire to determine construction acquisition cost and budget

8. Purchase price is established, and the purchase contract is update

9. LO registers loan with lender and disclosures are sent out

10. Loan is sent to setup then underwriting

11. Approval is issued, family gets a mortgage for the home and docs are sent to title.

12. Docs signed and keys given!

  

 Here are some particulars…

FHA – 

• Max LTV 96.5

• 620 Min. FICO

• Eligible property types:

• Site-Build

• Mobile Home-Single wide 

• Double Wide modular

•  Barndominium

• Borrower paid construction interest – optional

USDA – 

• Max LTV 100%

• Min. Fico 640

• Eligible property types:

• Site-Build

• Mobile Home-Single wide 

• Double Wide modular

• Borrower paid construction interest – no

VA

• Max LTV 100 – not including VA Funding Fee

• 620 Min. FICO

• Eligible property types:

• Site-Build

• Mobile Home-Single wide 

• Double Wide modular

•  Barndominium

• Borrower paid construction interest – no

Conventional

• Max LTV 95 – with FICO 700 for Fannie Mae 

• Max LTV 95 – for Freddie Mac

• Max LTV 97 – with FICO 720 for ChoiceHome

• 620 Min. FICO

• Eligible property types:

• Mobile Home-Single wide 

• MH Advantage

• Double Wide modular

•  Barndominium

• ChoiceHome

• Borrower paid construction interest – required

The best way to navigate this is to have a seasoned loan officer show you what he/she thinks is the best solution and then compare that to what you have/need.  I can say that for every construction deal I have closed, it has been a good thing.  

Casey Knowles

Ticket Mortgage Inc.

Read more :- https://ticketmortgage.com/