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Since January 2009
The only construction loans that I am aware of would require completion of the home. You typically need to provide a Certificate of Occupancy, and have a lender's inspection to confirm completion. There are hard money lenders that might accept less. However, there would be a cost for that type of loan. How badly do you need the additional money, and why would you not be completing the home? Is this a spec house, and you want to complete the inside for someone that buys the home?
Take a land loan for the purchase, then pay all cash for the construction. The best place to look for a land loan is a local credit union, or community bank.
A land loan will carry a higher than normal interest rate, but it may be your only way of getting the financing your looking for.
The only builder that I know of that works out shell homes is Jim Walter Homes. They usually finance their own deals...I haven't seen a whole lot from them lately so things may have changed. I think otherwise without a contractor you are out of luck.
PB,
It sounds like what E just spoke of.. A "shell builder" does and can finance their part of the deal.. The loan itself can be a little wacky though. My parents built a fishcamp through Jim Walters and it was fine, but the loan was rule of 78 loan (old school financing). Not a problem if you keep it, though. If you are simply hiring out the shell and have a free-n-clear, but incomplete, NON CO home, you will have issues getting financed. You most likely will have to get a construction-perm loan with a GC in place, most likely. Not impossible, just clunky. A little more detail about who/what will guide us, but simply put, your situation is not the same as a person buying a home in a neighborhood already finished, so the loan parameters or availability would not be the same. Keep rockin'.
I repeat, finance the land and pay cash for the construction, case closed
GD,
U tell 'em
Good morning Martin. It is as hot as FL up here in NE this week. I don't know how you do it.
From what I remember Jim Walters was pretty high with the rates, about 8.5% or something if I remember right. If the numbers work out I defintely echo George....
I heard that it was moving that way. It is very warm and a little out of the norm. We are not usually in the mid 90's like it is right now... Hang in there as it will break for you guy. We're just going to have to sweat it out.. keep rockin'.
Martin, did you get my email the other day...I'm going to be down in your neck of the woods wednesday...
We are going to be building a log cabin in Tennessee, we are finishing in the inside ourselves in order to save money. We don't to borrow more, we want our morgage payment at around $400. That is a payment we can afford if only one of use were working.
Ok, now the fog is clearing....most of the builders up there work with smaller local banks that will do loans like that. A lot of the larger institutional lenders will look at projects like that and turn them away because of the exposure to risk. Ask the builder for some people to talk with. For payments of $400 per month you are about the $65,000 range.
What! Where can we get a 15 year mortgage of $65,000 for only $400 a month? Is that with taxes and insurance?
PB,
No, $65,000 is not $400/month, especially for 15 years and especially, especially including taxes, insurance. E, no.. call me or email me about WED.
Keep rockin'.
Sorry, missed the 15 year part....
jz,
That's OK... Is this short term and small... What are you going to di with Land? LAND LOANS are very insolvent... No home on them. higher risk... slower to move.... = higher rate and lower loan-to-value. A little more specifics and we can probably ease the pain so you don't need a barf bag. Keep rockin'.
By specifics I think we need to know how much the cost of the land is? and how much is the cost of the home?
Most loans for shell homes are in that range. Are you wanting to buy one of the kits or to use an actual contractor?
The property is $25,000. The shell of the house, put together is $63,000. We will be building the house on the land. We will have $50,000 cash to put as a down payment. This is a long term investment, we plan on living in this house until we die.
PB,
That is good to know. BEFORE you buy the lot with cash, consult with a BANK local to the area. Log homes are difficult collateral in the Conventional lending world. A good banker will guide you as the best way to finance your home and how to do it. The last thing you want to do is "get stuck" in the middle of your build and need money. That would be very clunky to say the least. Local Bank in TN will do the trick. I have been to Boone, NC and they have those styles of homes there. Local banks are very familiar with the ins and outs of them. The mortgage people here will be overmatched by selfbuilding and log home collateral to give a clear answer. You have a great down payment to handle this project and regardless of rate and terms from the bank, the loan size will not be too large that a slightly higher rate will not hurt you too much in a monthly payment. Local Local Local... Keep rockin'.
Lender rating
Pearly Belle - Listen to George Devine and take a loan out for as much as you can on the land. Then use your savings and any additionally monies to build the home. That is going to be the only way to accomplish your goals. Lenders are going to want a Certificate of Occupancy before they will lend long term money on a home. Some hard money lenders will look at it but I don't think that would be in your best interest. Good Luck!
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Pearly Belle
Titusville, Fl
Contributions: 46
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We are going to be buying some land, and pay for it in cash. We are having a house built, but not finished. It will be a shell with electricity, plumbing, heating and cooling. The inside will be framed, but not finished. We are going to finish it ourselves. We expect this will take a couple of years. We are going to pay 50% of the cost of the shell, and mortgage the rest, about $40,000.00. It will be a 15 year mortgage. My question is will we be able to get a loan? We do have good credit.
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