Comments on: Construction Loans: Questions and Answers

By: country girl

country girl — Tue, 09 Mar 2010 04:39:59 +0000

It depends on the lender. If they want it upfront, it will be your responsibility to pay out the 15% to the contractor or to whom ever need money like the lumber company. If you have to sell something like the place you live in, talk to the lender and see if they can wait on it. Either way, just ask them and see what they say.
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By: Amanda H

Amanda H — Tue, 09 Mar 2010 04:37:59 +0000

These kind of things may vary greatly from bank to bank . however the ones I’ve talked to say this:

85% financing– this is in regard to how much they loan vs. the appraised value. What they do is take your blue prints, look at the lot, and appraise it BEFORE YOU EVER BREAK GROUND. If you dont do a huge custom home– but instead opt for one of the cheaper options like those "Built on your lot for $39 a square foot!" type builders, its possible you wont have to put money down. It COULD appraise for 100K while you’re only needing $85K to build (or whatever).

That said tehy probably would ask for the money required at the time you close on the land portion…. but you’d have ot ask the bank.

Also, FYI, usually during construction you pay interst only on only teh portion loaned to that date. . . making it a little cheaper.
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By: chipjet

chipjet — Tue, 09 Mar 2010 04:35:59 +0000

This is negotiable with the bank. They will want it as soon as possible.
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By: Bruce

Bruce — Mon, 08 Mar 2010 23:33:11 +0000

Construction Loan Questions?
If anyone can answer this, it would be great.

85% Financing Available – I know this means I need to pay 15% of the total loan, but do I have to pay the 15% upfront? Or can I pay it at the end or maybe as construction is going on?

I understand a mortgage and downpayment, but since the construction loan works differently, can I pay the down payment later on?