Posted by Jonathan Rexford on February 16, 2001 at 09:13:06:
- I have a working line of credit with my local bank which is @ prime rate. I think prime is 9% right now. So would it be wise to use this during construction and then re-fi when complete? How much will they lend @ what rates?
Depending on the ease that you can aquire the funds and the performance of your past a refi should not be a problem. As far as LTV, if you could build this thing for 80%of appraised value then a refi should not be a problem. The rates will depend on several factors of what type of loan you want to get. Full,lite,no-doc… each are there own animal with different rates and ltv qualifications.
You wrote:
- I also have a rental home free and clear that I am thinking of putting financing on since rates are looking good right now. I would have more than enough to cover the construction costs using this method. Eventually I would like to put permanent financing on everything I own. So this would be a temporary fix. IMO
To me this would be the answer. Here you have something that is free and clear, that you could borrow at a lesser rate then a credit line or a construction line…
You Said:
- Then there is always the conventional way I guess. Construction loan?
Construction loans are good. Find a local hometown bank that would let you roll it into a Permnant loan. I have a Construction Line setup at a large bank. I wished I had stayed with a local bank. At the local bank this credit line would have been pretty large, but with Washington mutual, I get lost with the numbers. I primarily build all of my speculations with the credit line, and resale to a end buyer for which I can and usually orginate the loan for them through my mortgage company. I hope this information does help as I have been there and will probably be there again. Maybe ED Garcia could shed some light on the subject.
You said:
This will be my first time building and I am wondering if lenders treat this any differently. As always thanks in advance for any and all responses
If this is the first time then it might be hard for you to get the construction loan. Some states require that you hire a Contractor to pull the permits if it is not going to be your primary residence. There are some comapnies that will do it for a fee.
Good Luck,
Jonathan Rexford