Financing in 21811>Question Details

Lorraine, Home Buyer in 21842


Asked by Lorraine, 21842 Fri Apr 18, 2008

I want to buy a piece of land that has an old house on it. I want to take down the house nad rebuild. I have been told that this property does not qualify for a morgage because of the condition of the house and that it does not qualify for a lot loan because it is not a cleared lot. How do you finance a property like this?

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Hi, I work for a local bank. If your plans are to live in the property, it is simple. My Bank provides a lot of this type of financing in the area. If your credit, income and assets are decent, the application process is straightforward and you should not have too much difficulty getting financing for this project. It does require more documentation than buying a resale home, as you need to provide all the related to the construction plans, specs, budget for the construction. If you are using a good local builder, they will take care of this for you. If you are considering acting as your own GC, it is more demanding and you will need a resume that shows you have the ability to manage the project and see it thru completion. Unlike the few banks (a lot have cut back or stopped lending for this purpose in wake of credit crunch) for this we provide acquisition and renovation funding based on the completed value of the property, instead of the lot cost + construction costs. We provide the renovation funds and the permanent loan after the completion of the project. Standard construction periods are 6,9,12 months... for larger projects, we provide 15, 18-month construction terms. If you wish, you can email me at I will provide written explanation of our program, documentation requirements and other important details that you will need to have when considering this option. If you include your best estimate of the cost to purchase existing property and construction budget and how much money you are considering borrowing that would be helpful to give you the information you need. Best of success, Byron
1 vote Thank Flag Link Sat Apr 19, 2008
Lorraine your best bet might be hard money, hard money lenders only lend on the as is value- at about 65% ltv but less restrictions on what you can do- you just need an exit plan- I dont lend residential in your state but google hard money and call them. I will warn you the cost on hard money is HIGH but if you stand to get what you want out of the deal its worth the cost.
0 votes Thank Flag Link Fri Apr 25, 2008
Try this approach...have the seller demolish the house on the property...clean it up and then sell "just" the lot. No structure, just a plain may have to get approvals from the health department to build. This will require the seller to get permits to demolish...this may take a few weeks or months depending on the seller....BUT will be eaiser for you to get the loan.


Adam Roop
The Roop Group
0 votes Thank Flag Link Sat Apr 19, 2008
I agree with Megan's recommendation, e.g. you should talk with a mortgage lender. More than likely you will end up financing the tear down and replacement with a construction loan.
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0 votes Thank Flag Link Sat Apr 19, 2008
A construction loan? Your best bet would be to talk to a loan officer.
0 votes Thank Flag Link Fri Apr 18, 2008
All of the local banks are who told me the information in the first place. A rehab loan is for if you want to rehabilitate the structure that is there, which I do not.
0 votes Thank Flag Link Fri Apr 18, 2008
A local bank may be you best source...... there are rehab loans available as well..... are you planning on putting money down on this?
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0 votes Thank Flag Link Fri Apr 18, 2008
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