construction loan while owning a home?

[IHateMyJob2004]

I asked a similar question yesterday.

In short, I figure we'd have to borrow $500K to buy the lot and build.

Our current home will probably profit $100K+ after commsions and taxes. Any shortfall could be supported via cash I have readily available.

Simple question.... Do I need to come up with the 20% down payment now(stretching my funds very tightly) or would a lender figure that the sale of my home would cover the 20% down pamyment required even though we wouldn't close on the sale of our current home until the new home was already built and ready to move into.

Thanks,
Karl

 

[IHateMyJob2004]

Also, wioll the construction loan cover the cost of the land or is that seperate?

 

[RightWinga]

You should not be buying land and building if you must ask this.

 

[IHateMyJob2004]

Originally posted by: RightWinga
You should not be buying land and building if you must ask this.

I've never done this before, so why wouldn't I ask?

There is more than one way. I could pay 20% down ffor the land, but interest rates on land only purchases is simply outrageous. This would be to simply secure the land.

I found you can do a construction loan that rolls all costs together. That's another option, but not sure of interest rates involved.

Rolling everything into one loan that doesn't start till after completion of the project makes sense if I can do that. I want to know if it's a valid idea though.

 

[timswim78]

Just a guess here:

If you put down 20%, the terms of your loan will probably be much more favorable than if you put down less.

Getting a loan for the home may be tougher unless you have some type of collateral for the bank.