When Do I Make Payments On a Construction Loan (IN DETAIL)
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- Опубліковано 3 сер 2024
- In this video, we'll explain financing for custom home construction, shedding light on cash flow dynamics, included costs, disbursement schedules, and payment timelines.
This video is for anyone interested in building your own home and trying to understand what payments you'll need to make when, when the lender disburses money to you, what costs are included under the loan, how you prove where your money was used, and more.
📋 Topics Covered:
Cash Flow Overview: Discover how cash flows in and out during the construction loan process. Learn how it differs from a traditional mortgage and what to expect.
Loan Costs: Gain insight into the costs encompassed by construction loans. We'll discuss prep work, feasibility studies, grading, permits, and more, so you can plan your budget effectively.
Loan Disbursement: Find out when and how you receive funds from your construction loan. Understand the disbursement schedule and the role it plays in your project's success.
Payment Obligations: Learn when and how you'll need to make payments on your construction loan. We'll cover interest payments, principal repayments, and any other financial responsibilities you may have.
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Thank you so much for breaking this down and making it understandable!
Glad it was helpful!
Great outline review.
Thank you!
If I paid all that and the bank is not disbursing the money after the first phase is completed . With what money the first part of the construction is done ?
I own my lot I got my plot plan grading plan done I got my house blueprint done. But it's in a rural area. I got access to gas, sewer, water, electric. I need 300k construction loan, house will be worth 550k when done. What's my cost to get a construction loan?
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.
I’m selling two rental properties for the start up money, one in 2024 (already under contract) and one in 2025. Staying in our current home until we get the COA. Just trying to figure out how that is going to work with interest payments. We just closed on land for cash and have about $50 left to get started till first rental sells. So we will likely have some interest payments. And then next year give another chunk to the bank. Should I wait till we can sell all rental properties ?
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
My VA construction loan broker is trying to add P&I to my loan as payment during the construction period. I had to get them to remove the tax and insurance. But financing principle during the construction period makes zero sense. It's double interest if you ask me
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.
What happens if you dont own the land?
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.