I am having a home built on a lot I have purchased….?

Deal Score0

The construction loan is financed for about $ 450,000. My husband and I have about $ 8000 worth of debt. We want to obtain a debt consolidation loan just to pay off these debts. By paying this off we will raise our credit scores almost 40-60 points. My husband is at a 631 score. He wants to be at a 700 or 720 by the end of the loan to secure a low interest rate. Once the mortgage is finalized we will roll this $ 8000 debt into the new mortgage loan. Although we are approved for $ 450,000…we are thinking the home can be built for $ 400,000. We plan to pull some equity out of the house and put it to aside for a rainy day.

DOES THIS PLAN SOUND EFFECTIVE TO YOU?
ANY OTHER SUGGESTIONS?

3 Comments
  1. Reply
    mamanana9
    May 3, 2011 at 8:34 am

    first off congratulations second who did you go thru they kept telling us our score was to low and its about like yours

  2. Reply
    Pluto
    May 3, 2011 at 9:27 am

    Anytime remodeling or building, it will cost lot more than you anticipate. I have many friends who either built or did major remodel on their houses, and they all ended up paying more than a double of what they thought. Be careful.

  3. Reply
    asgard_solutions
    May 3, 2011 at 9:42 am

    It sounds like a good idea in theory. However here is the problem with it. The bank that is doing your construction loan will only release a draw for construction purposes and then only when a new phase of the construction is complete. Unless you have a very unusual lender, they probably will not release funds to you to pay down your other debt.

    Without knowing what kind of debt it is and what other things you have available, I can not make another suggestion at this time. There may be another way to do this. I would suggest talking to your lender or your local banker about it. They may be able to find a way for you to do this now.

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