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Tear down construction loan question

I am checking into possibility of buying a teardown and building in greater-boston. Before I call a bunch of banks I wanted to get an idea of what that would entail. I am budgeting 400 for land and 300 for new building. My credit has been 800s for years, my wife's is not very good. No debt, we roughly make 80-110/yr each, 25% down.

Can we do it with just me being on the loan? Can we do it with someone else instead of my wife being on the mortgage, relatives with perfect credit?

Can this be a single transaction? Purchase an existing tear-down quality house, provide plans, builder/construction company, due diligence, and get a construction loan for 700 ?
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June 12 2011 - Natick
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I work for Salem Five.  We do a ton of Renovation and Construction lending and most of the Modular companies have worked with us in the past.  They know we understand how it works.  It avoids issues working with a lender that is unfamiliar with how modular loans disburse differently than stick built homes.

I feel we are extremely competetive on all our prioducts, our construction programs are no different. We have a tremendouse construction department that will work with you throughout the construction process.
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June 13 2011
Yes, I believe you can get a mortgage with just your name or another relatives name. It ultimately depends on the mortgage company you choose.  You can get a loan for the land and construction in one swoop. The rates are really low now so you should be able to get a  good one. Just remember that even though you are going to tear it down, the bank/broker will still consider the cost of the property when they give out the loan. Good Luck! 
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June 13 2011
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Andrew,
You are exactly on the money again :) Modular sales people did refer me to Salem Five. Why?!  Is this the only company that will pay out a COD? That is one more worry - limited choice of lenders, beyond just a construction loan.
Are you an owner of a modular home? Curious to hear about your experience.
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June 13 2011
The issue issue is two fold.  The modular company will not let the home off the truck because once it is affixed to the foundation it becomes real property and to recoup the costs the modular company would have to foreclose.  The issue for the bank is the bulk of the funds are in the modular construction and the bank pays that out before they really have anything.

If you are talking to a modular company about a project in MA I would be bet they will suggest contacting Salem Five for your financing.  My experience is different than Michaels when it comes to modular construction.  Most folks are suprised when they find out a home is modular or panelized construction.  Most would think they could tell but the reality is you can't. 
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June 13 2011
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@Michael
I will check out Needham Bank, thanks for that advice.
This house is for me, I will be the primary resident. It is that my wife may have an odd circumstance on her credit that will prevent me from using her on the mortgage.
The plan is to live in this house for 10-20 years, after that who's to say how the house was assembled :)

@Andrew
I was reading some place that the problem with paying on delivery is ameliorated with a process called "assignment of funds". Is that common?

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June 12 2011
Johny,

I'm assuming you're looking to build this house as an investment.  If that's the case, I would suggest a stick build rather than a modular.  Around here in my experience people tend to be rather put off when they discover a home is modular.  For some reason the term modular has developed a negative stigma.

Also, I would strongly suggest when it's time to get some funding that you talk to the good folks at Needham Bank.  They finance probably 90%+ of the new construction in Needham and a large amount of the construction projects in Wellesley.  They're an old fashioned bank and they do business with a hand shake.  You're treated like a person and not a file.  Also, they offer a nice package to builders where if you get your construction loan through them they offer a special low rate on a mortgage to anyone who buys the property from you. 
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June 12 2011
Thanks So-Cal.

The lender will use the lower middle score.  A Non-Owner occupant on construction will make it a much more difficult loan. 

The difference between stick build and modular has more to do with Funding than the constuction.  The modular company will need a deposit to put the home into production and they will want the balance before the home is taken off the truck(curb side funding).  Many lenders want no part of curbside funding. 
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June 12 2011
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Funny you should ask :) I feel more comfortable with modular construction - their estimates seem to have less margin for error. Now if the banks agree with that, is another question.

For the non-owner occupied co-borrower, I feel comfortable with both parents to be on the mortgage and being co-investors.

How does credit score of the spouse affect "total" score? Is lowest of the two taken or average?
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June 12 2011
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@ JohnnyDrew...

Not that Andrew needs my endorsement, but I'll throw it out there anyways. I've lurked on these boards a while, and his willingness to help folks "in his neighborhood" has always come through...and he's typically spot-on with his advice - even if it is not to his benefit to do so.
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June 12 2011
Johny,

You won't be able to use your wife's income without using her credit, a Non owner occupant co-borrower might be an option but a long shot you need a true Jumbo Construction loan.

If you are looking for a loan amount of $525,000 (75% of $700,000) you will have better luck than if you are looking for a loan amount of $700,000.

Are you looking to do stick build or are you looking at modular construction?  I would be happy to go through the different options you have if you want to provide a few more details.
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June 12 2011
 
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