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

Inherited property typically is credited with the donor’s holding period so as long as your ownership plus the donor’s is a year or more, then yes.

@@MortgageMasteryTheater thanks! Follow up question. Me and my wife want to build a house on her father’s land. He wants to put our name on the deed along with his. He inherited the land decades ago. Do me and my wife’s name have to be on the deed for more than a year?

@@ryane3970 That's probably a question you should ask your lender as it requires an extrapolation of the basic guidelines. Let me know if you need a referral to a lender in your area and I will see what I can do.

True.

Hi. That is odd based upon my experience. Won't be double interest as it will pay down the principal balance during construction and not go to interest.

@@MortgageMasteryTheater On a VA construction loan the payments during the construction period are wrapped into the loan for a true 0 down, 0 out of pocket loan. They're taking what I would be paying and adding it to the total.

@@chadd587 I guess I'd have to see the disclosures to understand what they are doing.

Thank you. If the date of the purchase (with the original broker) falls within the terms of the agreement (purchase date and geographic boundaries), then you would be contractually obligated to pay the broker according to the terms of the agreement. How that is paid / enforced is going to vary from case to case. Some realtors may even agree to release you but you should never assume this.

@@MortgageMasteryTheater Purchase date meaning the original P&S offer date, not the closing date?

@@therealtashiro Article 2 of the form appears to indicate that it would cover any contract that was entered into before expiration regardless of the closing date.

Hi Samuel. You would need to inquire of individual banks. Spec lending is very similar structurally (project, contractor and borrower approval process) but the lending terms will be significantly different - especially with regards to down payment requirements. Best just to get the directory of local lenders and call them all.

Thank you!

Some lenders are queasy about lending when construction has already started due to heightened risk of undetected mechanics and other liens. That said, some will still do it so you just need to ask.You'll have a better chance if you have good records of what was done by whom and proof of payment. Happy to refer a lender if you let me know where you are building. Best to you.

I spoke with one of more experienced construction lenders and they will do this. Let me know where you are building and I will try to find a good broker with access to this lender.

I understand the confusion. A temp buydown is just a pile of money set aside in the lender's escrow account to offset a part of your monthly payment over a specified period of time. Seen this way, they are not a lot different than escrows for taxes or insurance - money deposited into an account to pay future obligations. If the seller is willing to give us money to do this, we don't look a gift horse in the mouth. Borrower- paid buydowns are allowed by some lenders (and not prohibited by regulations), but uncommon for two reasons; First and foremost, because lender fees are limited by regulations and borrower-paid buydowns are deemed to be fees that use up what could otherwise be charged by the lender. Secondly, if i want to use my own money to pretend I have a lower mortgage payment for a period of time, I don't need to involve the lender. I can just set up a separate savings account and use a portion of it every month. There is a third way that has the lender (not the seller) "pay" for this but the lender will increase your interest rate and/or fees to compensate themselves for funding your buydown. (So, the borrower is really paying for it.) You might be tempted to do this if you think interest rates will come down in the future but note that unlike seller and borrower- paid buydowns, lender paid buydowns are not refundable if you pay the loan off before the buydown period is over.

@@MortgageMasteryTheater Thank you so much for explaining that so well! I think the confusion lies when some lenders say, "it can only be paid by the seller" leading one to believe that it is against regulation for the buyer to pay. I do agree with everything you said:) Thank you so much for clearing that up and for your honesty!

Nice. You should not have to put anything down. If you wanted to borrow the full 500k, your loan to "cost" would be 500/1mm or 50%. Unless it appraised lower than 1mm, then your loan to value would be 500/appraised value. Either way, should not need to put money down. Feel free to reach out if you need a recommendation for a good mortgage broker.

@@MortgageMasteryTheater Thank you so much!

Thanks Missy!

Hi. Thanks so much for reaching out. Not entirely clear on your question. If you are asking if you can use the equity in Texas to secure your construction loan in Arkansas, I suspect the answer is no. There are some lenders that will "cross-collateralize" a loan against more than one property but these are rare and even these are typically limited to properties within the same county. The equity in your Arkansas land will certainly be considered in the construction loan collateral. I know many lenders who will lend up to 95% of the the total cost of building a new primary. So, if you have 25k in equity in land, and you needed 475k all in for hard and soft costs for the new project imn Arkansas, that would be a total cost of 500k (land plus build) and a max loan of 475K allowing you to bring nothing to the table. Reach out if you need a mortgage broker recommendation in your market that can do this type of loan and blessings on your project!

Super helpful info. Thank you!

Sorry. Not sure i understand the question. You would need to own land to build on it (unless building on leased land which very few lenders will do). You can buy land with a construction loan but that takes a patient seller and a willingness on your part to invest a lot of money into the project for plans, permits, etc before owning land.

350/435 is just a hair over 80%. Almost any construction lender can do that. Many can go over 80%. Go to mortgagematchup.com to find a great broker.

@@MortgageMasteryTheater Thank you! I also plan to put down $150K down in cash. I should be in a good position I think. Thank you for the information.

Sounds like maybe you subdivided and created a buildable lot? If so, did the mortgage lien attached to both resulting lots (the one with the house and the one without?). If you have owned the land for more than a year, then the "cost" of the land for loan to cost calculation purposes is the current appraised value (determined by the construction loan appraisal). If the properties are subdivided, then the lot with the house probably won't be included in the loan (i.e, won't be used as security for the construction loan). Feel free to call to chat about this further. 206-999-6941. PDT.

Thank you!

Good presentation I understand no one's getting many good deals for ARMs. But if someone were getting a deal on a 3/1 ARM (0.75% less rate compared to 30 year fixed) it is a good option in current environment considering the general expectation that rates come down (based on yield curve you showed)

Thank you. Typically you get credit for then donor’s holding period which i assume is more than a year. So, land cost would be the fmv for purposes of the loan to cost calculation.

Thank you!

Thank you

Hi TT. I am afraid that I won't be much help with that question. The answer will depend in part on whether it is simply a financial comparison or if your personal / family needs / preferences facor in. If the former, look for a good builder and realtor you can trust and get their input. Best of luck. Sounds like a great project.

Glad it was helpful!