I think you are reading that right. Work out the specifics with your specific construction lender as they all have their own prepaid policies. Find a great one at mortgagematchup.com

Thank you!

Hi! Go to mortgagematchup.com. You will find lots of great mortgage brokers there. Be sure to ask about specific construction lending experience. Construction lending is pretty unique and you need experienced lenders.

Definitely not. There are a lot of other considerations (e.g, when you need to be done, when your contractor is avaiable, etc). The value vs. the cost of the land may not even be consequential to your particular situation (like if you don't need to borrow that much and don't need a higher loan amount).

Thanks. Hope you find content more to your liking elsewhere.

HI Randy. I think in my example, the land had increased in value tremendously . The value far exceeeded the purchase price.

Thanks so much!

Thank you. Most lenders have a process for verifying work started and/or completed prior to commencement of the construction loan. Some lenders are more restrictive than others in terms of their willingness to lend on a project already started so check with your specific lender. You should be able to contribute additional cash during the loan process but lenders will vary here as well. Consruction lending is very niche so always best to pick a lender and ask specific questions. You can find a lot of great brokers in your area at mortgagematchup.com. Be sure to confirm your broker has construction loan experience. Blessings!

I am assuming you meant "sell" iin five years. Depends on how much you are being "paid" to transfer the risk from the lender to yourself. If the 30 fixed rate was 6 and the 5/5 rate was 5.875% (let's assume same costs), I probably wouldn't accept the additional risks (that I might need to be in the loan longer than five years and rates go up).

Hi. Thanks for watching! Hang on to your cash as much as possible until you connect with a lender about your project. Cash can really impact the overall qualifying and deal structure. You’ll probably need some for soft costs (plans and permits) before the loan is approved. Go to mortgagematchup.com and find a great mortgage broker in your market. Make sure they have construction lending experience. Blessings.

Not engough info to say for sure. If land owned for more than one year, then value should be considered "cost" in the Loan To Cost calc. If so, appraised value (930K) is equal in your example to the "costs" (930K in both cases) so the max loan is based upon the lower of these two which is 930k. Max loan of 744K. First draw on loan is to pay off land loan if any. Remaining funds go towards 750k construction. Down payment is 20% (Value less loan amount).

Hi. Loan terms will vary depending on lender and scope of the project but 9 months is pretty typical, longer if you are building a larger home. Be sure to connect with a lender before starting any of the actual building (e.g, foundation work) as many lenders shy away from projects already started. Soft costs are fine. Go to mortgagematchup.com and find a great broker. Be sure to find one with construction lending experience.

My pleasure.

All good questions. Happy to chat. 206-999-6941. Generally, any lender will base their max loan amount on the lower of the cost to build/acquire (land plus mfgf home plus install costs) or the appraised value. So, if all that cost 220 and it appraises for 250, the value will be set at 220k. This is referred to lower of loan to cost or loan to value. So, if the lender has a max loan amount of 90%, they would only lend 90% of 220K>. Mfg home installation lenders are few, fannie/freddie don't generally do them. I would call around your local community banks to see what is available and also look in mortgagematchup.com for a local broker who has constructon loan experience. You might tell them that a compamy called AFR does them. That said, AFR does not have a great reputation for customer service so be prepared for a bit of a rock ride. Finally, look for a one time close construction loan that automatically rolls into the permanent loan so you don't have to pay loan costs twice. Blessings.

Lenders will generally attribute the donor's holding period to the borrower so you should get credit for the value. That said, go to mortgagematchup.com and find a good broker with construction lending experience and pose that question to a specific lender. Good luck

I am afraid that I can't speak to the specifics of coverage requirements in a forced-placed context. In WA State, lenders are allowed to require dwelling coverage at least equal to the loan amount or proof that coverage is enough to reconstruct the property if coverage is lower than the loan amount.

@@MortgageMasteryTheater thank you, I certainly appreciate your response and the information...

You bet. Thank you!

Good points. Thanks.

Hi. Not clear about the nature of your question. Can you be more specific about the circumstance you are describing and the concern you want me to comment on?

@@MortgageMasteryTheater I think OP means if you paid $50k but now it's worth $40k

Thank you!

Hi. You should not need to do your own appraisal of the lot. That will be included with the project appraisal for the construction loan. What state are you in? I can refer you to a mortgage broker with good programs.

@@MortgageMasteryTheater i’m in CA!

Thanks!

Thanks!

Thank you. Give Mr. Ramsey my regards next time you see him.

Hi. In my example, closing in March, only March interest is collected in advance (“prepaid”). April interest is collected with your first regular mortgage payment on May 1st. If you have a typical fixed rate, fully amortizing loan, your total principal and interest payment will be the same every month. The allocation of each payment between principal and interest will change each month as the amount owed on the loan goes down each month, less interest will be charged the next month.

​@@MortgageMasteryTheaterOk... so the Aprils monthly payment is collected in May...

@@Mohit-uk6pm interest accrued on the loan in April is paid with the payment due on May 1st. Interest accrued during May is paid with the payment due June 1st. And so on.

​@@MortgageMasteryTheater.. ohhk... Thank you for the detail explanation. I saw other channels also but your videos are very much in detail and easy to understand.

@@Mohit-uk6pm Thanks!

You bet!

To be clear, no one will require you to have owned the land for a year to use it as part of the equity in the deal (i.e, "use it as a down payment"). You just have to have owned it for a year to get credit for any appreciation in land value since you bought it. 'So, if you paid 100k for land and it is now legitimately worth 130k but you bought it 9 months ago, they will only give you value of 100k for purposes of their loan to value / loan to cost calculation.

@MortgageMasteryTheater thanks for the explanation. I'm buying land now and plan to build in 2yrs. Maybe the value will be higher in the future.

Hi. Depends on your specific needs, resources and credit profile. I would start by going to mortgagematchup.com and finding a good mortgage broker in your local market. Feel free to reach out with additional questions.

Glad it was helpful!

That might work. Was the purchase below market, in other words, was there a partial gift of equity by selling it to you for 40 when it was worth 70 or was there another reason for the big difference? Either way, construction lenders are often not bound by fannie / freddie and may treat it as a partial gift of equity and allow for the higher land value. If not the first one you speak with, try others.

@@MortgageMasteryTheater my brother sold it to me at a low price because of being family.

It’s pretty general but don’t let that stop you from explaining your particular situation and asking.

Thank you Carmen!

Hi Mandy. It would be the latter. Assuming the borrower qualified for a 440K loan amount, that would be fully available to cover all hard and soft costs of the project and would not be diminished by the cost of the land. It would only be diminished if there were liens against the land (or recorded judgments against the borower) that needed to be cleared before closing.

If by cost you mean closing costs, that depends on the lender. Go to mortgagematchup.com and find a great mortgage broker in your market. If you mean how much cash you need to bring to the deal, I suspect none if you only need 300k and don't have an liens on the lot. 300/550 is about 55% loan to value and every lender I know will go that high on a construction loan.

Hi. I am not clear on what "the tax thing" is. Not sure if you are concerned about occupancy on the current home or the new one. If you have been in your current home for a year or more, then there i no problem leaving it, even if you weren't forced to. you could buy a new home and leave the va loan in place and rent the old home. Your entitlement charge would stay on the rented home. Regarding the new home, if it is your inent to occupy for a year as a primary, then you can finance as primary. If not, probably a second home.

Hi Leighanne. Sounds like a fun project. The cash you will need for the project includes any of the building costs that are not covered by the loan amount. So, paid cash for land and need 400 to build including loan costs, permits, etc. if your loan amount is 300k, you will need to deposit 100k with the lender at closing - right at the the beginning of the building process. After that, you will need to make interest only payments on the outstanding balance of the loan every month plus real estate taxes and insurance as they come due. Hard for me to say how that fits in overall with your sales plan. Go to mortgagematchup.com and find a good broker with construction lending experience and they will walk you through it. I am licensed in WA and ID. Blessings.

@@MortgageMasteryTheater giant thanks for information. We’re building outside of Denver in the foothills. We are able to do this as ‘regular people’ because of years of smart decisions, a little more than 50% cash at the end. I am a jumble of nerves cause we are just getting started. I may need more than luck… lots of meditation … wooosaaa