Hailing EE and other bankers/money men

[Kenneth Brown]

If I have a credit score of 760 and my wifes is 743 does that mean we are pretty good? What about 8.0 on a real estate loan? Is that high or low or just about right for us?

 

[KRS]

Re: Hailing EE and other bankers/money men

Is 8.0 an interest rate?<br /><br />Yes, 760 is a decent score.<br /><br />What is more important is the LTV (loan-to-value) and how your income services your debts (debt-to-income ratio).<br /><br />Is it owner occupied, is it residential, what type of construction, and where is it located.

 

[Limited-Time]

Re: Hailing EE and other bankers/money men

KB check this out for credit score info.

 

[Kenneth Brown]

Re: Hailing EE and other bankers/money men

My DTI is very good, home I'm in now is paid off. We are looking at new construction on land we have finaced. I've got a little over 10% to put down plus the equity in the land. Tax rolls say the land is $88,000, actual value is closer to $48,000, and I owe about $34,000. Location is in central Texas, rural.

 

[eeboater]

Re: Hailing EE and other bankers/money men

So, just so I'm straight, you own your house, and want to build a new house on land you currently owe $34,000 on?<br /><br />How much is the new construction going to cost, and what is the expected appraised value of this new construction when it is complete?<br /><br />Sean

 

[Kenneth Brown]

Re: Hailing EE and other bankers/money men

House is going to run $106,000 + - 3%. It should appraise for around $125,000 when completed. The land will also go up some more in value as there is still lots to do. When completed with land improvements made (about $3000 out of my pocket, no financing) the total property should appraise around $180,000, maybe a little more.<br /><br />As a side note- When I talked to my banker today he mentioned I could do this just about anyway I want. I have a loan available from a family member at 6% interest and a couple hundred in lawyers fees to draft the papers. On a 30 year note for $100,000 I would save $168 a month going with the 6% VS the 8.5%. My initial plans are to sell my current house as soon as the new one is complete and pay off the land note. Wish the current house would bring more but it won't. I have two buyers already lined up for it, they both want it for a rent house.

 

[vipzach]

Re: Hailing EE and other bankers/money men

760 is a good score. 8% seems a little high. My credit score is 640, I just financed my new house at 6.5%, I financed 101,000 and the house appraised at 116,000. Maybe this is not comparing apples to apples, but the 8% just seemed kinda high.

 

[Reel Poor]

Re: Hailing EE and other bankers/money men

Kenneth if you cant get a bank to get get close to the 6% loan offered from a family member, I would do the legal paper work that would be required and borrow the money from them. Just keep in mind this is a business venture for them (family member).If you default on payment you should expect them to react as if, you are not family (this is business). If you cant pay the note for whatever reason you should expect nothing else but, for them to forclose on your mortgage (take your house away from you) as that is what a lending company would do also. If you go into a contract with them knowing and understanding this is a posibility of what life sometimes deals us (God forbid) you will be ok. If you think that they may/should give leaneantcy, dont borrow from family. <br /><br />There are a couple of benefits from having a loan like this. Though they are recorded in the courthouse as a lean, they are not reported to the credit bureau, which on paper shows your ITD very low if trying to purchase something else on credit. This in it self has a down fall if your not responsible with your money, can easily lead to overloading your ars.<br /><br />I would try to deal with the banks first, if all else fails then family.<br /><br />8% is not a good rate for a 760 credit score. I would be looking for the 6% neighborhood. Also if you have any credit card debt try to pay them off before borrowing. Credit card debt can drive up your rate quote.<br /><br />Good Luck

 

[KRS]

Re: Hailing EE and other bankers/money men

This is a construction loan request, with 10% down and little equity in the land. All said and done, IF the land/improvements appraise for $180,000, and you owe $140,000, you'll be at 77% LTV. If your costs go up or if the appraisal is lower than expected, then you'll be over the 80% LTV threshold that most banks abide by for residential construction.<br /><br />You didn't mention a contractor, is this an owner-builder?<br /><br />With that knowledge, 8% isn't a bad rate... for the construction line. The permanent loan should be in the 6's though.

 

[KRS]

Re: Hailing EE and other bankers/money men

I have been a banker for 14 years, and currently work as an in-branch loan underwriter and credit analyst doing business loans, agricultural loans, and commercial/residential construction lines of credit, equipment, etc....<br /><br />Our rate is 7.5% fixed for the term of construction, offered as a line of credit so you only pay interest on what you draw, the land payoff is the first draw, the construction line of credit has a 1% bank fee + closing costs; plans and material list must be appraised prior to start of the construction line, and you must be approved for your permanent loan prior to start of the construction line.<br /><br />Our LTV max is 80%, of cost or appraisal, whichever is less. So, using our rule, your valuation would be cost of land + cost of construction / .8 = max loan, unless appraisal came in lower and then it would be 80% of appraisal.<br /><br />If you have any other questions, post them here and I'll get back later tonight or tomorrow.

 

[Kenneth Brown]

Re: Hailing EE and other bankers/money men

OK, where to start? I know. Thanks for everyones advice. Please continue to offer advice if you have it. Knowledge is a great thing. We are going with the family loan. It beats anything offered out there. <br /><br />Reel Poor- I understand the family/business deal. I fully understand and expect them to foreclose if I was to default. I can deal with that possibility, I just hope that if it did happen that they could deal with it also. I see absolutely no reason why it would happen though. Either my wifes or my income alone would allow us to pay all necc bills and still live. Kinda nice having a litle money but living like a pauper. <br /><br />KRS- My bank prefers to do one laon one time, no construction loan. They have a one time closing, no points, orig fee's, etc. The interest rate is what is swaying me away. This is going to be a contractor built. I was initially going to do an owner/builder as the savings are awful nice. I looked at it realistically. I have the time to do it as I work early mornings and I'm off by 12:30. I have most of the knowledge as I worked construction in highschool. I have way too many tools for a piddler like myself. What I don't have is the patience to deal with contractors not showing up, the wife constantly changing her mind, always traveling or on the phone looking for the deals, etc. In the end I decided that it wasn't for me. My job is pretty stressful, I have 2 young kids who add to the stress level, and I already take blood pressure pills and have been for 8 years, and I'm only 31. Nope, no more stress for me please.

 

[KRS]

Re: Hailing EE and other bankers/money men

Single-close deals are always more expensive.<br /><br />Excellent, we expect pictures