First time buyer mortgage + "construction loan" question
 

Total newbie here looing for some basic advice. We are considering
purchasing a home that we'd want to do some extensive remodeling on
before moving in (knocking out walls, maybe move the kitchen, at a
minimum, remodel the kitchen, etc). We have been reading online about
a "one-time close" mortgage where I think you can roll the
"construction loan" part into your mortgage all under one loan. This
seems like what we want (we won't be doing the remodeling
ourselves--will hire contractor or architect).

Can anyone provide more insight, advice on where to find one, what to
look for, gotchas to avoid regarding this situation? One question that
comes to mind is will you pay a higher interest rate overall on the
loan doing it this way (higher than just getting a "normal" mortgage)?
Are these loans harder to find?

BTW we are planning on a 30 year fixed mortgage, and paying 20% down.

Thanks,
Chris

Chris wrote:
Total newbie here looing for some basic advice. We are considering
purchasing a home that we'd want to do some extensive remodeling on
before moving in (knocking out walls, maybe move the kitchen, at a
minimum, remodel the kitchen, etc). We have been reading online about
a "one-time close" mortgage where I think you can roll the
"construction loan" part into your mortgage all under one loan. This
seems like what we want (we won't be doing the remodeling
ourselves--will hire contractor or architect).

Can anyone provide more insight, advice on where to find one, what to
look for, gotchas to avoid regarding this situation? One question that
comes to mind is will you pay a higher interest rate overall on the
loan doing it this way (higher than just getting a "normal" mortgage)?
Are these loans harder to find?

BTW we are planning on a 30 year fixed mortgage, and paying 20% down.

Thanks,
Chris


well i can't really answer your question but one thing to consider is
that constructors typically are not paying property taxes on the houses
they construct. Just on the land. Perhaps you could get the
municipality to drop taxes if they consider it somehow in 'need' of
work!? Perhaps this factors into the loan terms of a construction loan?

Just a thought.

On 11 Jul 2005 08:01:12 -0700, someone wrote:

Are these loans harder to find?

Its not the usual product. Ask your mortgage broker, and compare
rates to regular loans, and then you will know fer shur and not just
our speculation. I am not trying to jerk your chain, but your Q
really comes down to specifics and general won't cut it.

BTW, you being a 1st time buyer, I am very very skeptical to this
being the way to go. Unless you have extensive construction
experience as something other than an owner, you will be jumping all
at once into ownership and remodelling/construction with no
experience. Remodelling or construction are some of the most
stressful things that a homeowner can undertake and you are thinking
of doing it on your first home.

Now, I did something even more extreme for MY first property (an
apartment building that I bought as a shell and gut rehabbed) BUT, I
had been a Project Engineer (large construction jobs) and was working
for an architect and had a degree in architecture. AND had enough
cash available to buy the shell for cash so only needed to deal with a
construction loan, not big purchase money payments while the place was
torn up and unuseable - ya got the bucks to live in one place and
remodel another, if the remodel job takes 3 times as long as you
hoped?

Can be done but not for the gentle.


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