Financing in Shepherdsville>Question Details

Brian, Home Buyer in Shepherdsville, KY

I have a credit score of 630 (according to experian.experiandirect.com) and I'm looking to build a new home on my own land. The land will be worth

Asked by Brian, Shepherdsville, KY Wed Oct 5, 2011

approximately 10% of the value of my home. Are there any loans out there for me?

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4
Brian,
Best to talk with several of your local banks to see what they are offering for the construction loan.
You will find which one you will be most comfortable with.
0 votes Thank Flag Link Fri Feb 1, 2013
More is involved for loan approval than just a credit score . Best confer with mortgage broker

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Thu Oct 6, 2011
Construction loans aren't super common these days, the ones I am aware of require a 20-25% down payment - equity in the land can count towards the down payment but 10% still may not cut it and you'd have to bring in some of your own funds.

Also good credit is typically needed, and the 630 score you got from Experian is your consumer credit score, not your FICO score (which is what all of us mortgage lenders use), and your consumer scores tend to be higher than your FICO score. You can get your FICO scores at http://www.myfico.com though (Equifax & TransUnion only, as Experian doesn't let consumers get their FICO score unless it's through a creditor who discloses it to them).

About 5 years back a friend of mine purchased some land out here in Riverside County with cash, few months later went out and built a ~400 sq ft home with some private financing. A little after 1 year later he did a 203k rehab loan and built out the rest of the home, the existing 400 sq ft was converted to the den/kitchen + guest bathroom, made it into a real nice home he moved into. Not everyone can do that, just a good example of someone who had a plan, used creative financing and a 203k loan to "construct" a home. Private financing & FHA loans do not require good credit, although private financing construction loans are tougher to find these days and will likely need more than 10% into the project, so step 1 will be more difficult than step 2, but you need to have all of your ducks in a row for step 2 to work out or you will be stuck living in a shack with a high interest rate from step 1.
0 votes Thank Flag Link Thu Oct 6, 2011
Dear Brian --

The quick answer is a wishy-washy "maybe."

New construction lending always has been a special breed of mortgage financing, with added layers of risk to the lender and thus cost to the borrower.

The lending market has tightened up significantly over the past few years, and some lenders have bailed out of construction lending entirely.

Still, there is such financing out there, depending on a number of factors. In your situation, I recommend that you talk first with a loan officer wherever you currently bank - and/or - with a bank that is right there in Shepherdsville. Strong LOCALLY-BASED banks tend to be the most "pro-construction."

Hope this helps you. Best wishes and hope you'll soon be building your dream home!

Syndi Chesser, 100% Club, Broker Associate, Builder
Senior Partner - Chesser Meade Group
Accredited Buyer Representative (ABR)
Certified Distressed Property Expert (CDPE)
RE/MAX Associates of Louisville (Kentucky)
O/C: 502.222.9167
Fax: 502.222.9030
Email: ChesserMeadeGrp@aol.com
Web: http://www.ChesserMeadeGroup.com
Web Reference: http://www.VIPBuyerKY.com
0 votes Thank Flag Link Wed Oct 5, 2011
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