How does having our lot already paid for play into the equation for a home mortgage loan for building a house?

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For example, we are buiding a home for $ 300,000. We need a loan for $ 200,000 and our land is worth about $ 30,000. Do we receive “credit” for a clear lien – making the loan amount actually $ 170,000?

2 Comments
  1. Reply
    crazynico3
    May 16, 2011 at 4:49 am

    depends on the state you’re in, but i know in California, you’ll be getting what’s called a “construction loan” which you’ll need to replace with a traditional trust deed after construction is finished.

  2. Reply
    morris the cat
    May 16, 2011 at 5:22 am

    -owning the lot, paid for is like having 30,000 in a savings account–it is an asset you own..if you need 200 K for a mortgage, then you must be able to qualify for a mtg of that amt.–owning the land does not reduce the amt needed to build the house– remember, the most important thing is to be able to qualify for a mtg of $ 200 K by having good credit, other assets, like savings or stocks or bonds and are you building the home yourself-will it be worth 100K more than your cost to build it?? that will be help-full– since it will give you 100 K equity in the home and make a 200 K mtg easier to obtain if you have 100K equity in the home- talk to a mtg broker or a savings & loan in your area to get some answers !! good luck to you..

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