If we buy a lot with cash, does that investment count as part of a down payment in getting a construction loan?

Asked by Maurita Kling, 04578 Wed Jun 22, 2011

We are ready to retire at year's end and have seen several lots in Payson that appeal to us, but are not sure what is involved in getting a construction loan, esp since we will be living on retirement money. Does the ownership of the land count as part of a down payment? What are current int rates in the area at this time???

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Bill Parker,…, , Scottsdale, AZ
Wed Jun 22, 2011
Hi Maurita:

Short answer: Yes, the equity in the lot will be taken into consideration when applying for a construction loan.

The fact you are going to be living on retirement income really plays no role in the underwriting decision. You will just need to prove it will be a continuing source of income for at least the next 3 years. In these economic times, retirement income can be much more attractive than employment income...:(

We have construction money at 7.5%, interest-only during the construction phase, then it switches to a permanent fixed-rate loan at then-current market rates.

Let's keep in touch, as lending conditions change constantly, so it would be good for you to be kept up to date as things progress and you get closer to buidling your home.

Bill Parker, Loan Officer
AZ Lic# 09011570
NMLS #223607
CPA--Licensed, no longer practicing

Legacy Group Lending, Inc.
15333 N. Pima Road, Suite 300
Scottsdale, AZ 85260
(O) 480-993-3080; (M) 602-565-3646; (F) 480-993-3081
EM: Bill.Parker@Legacyg.com
Website: http://www.LegacyG.com

MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.

If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
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Paul Bates, , Payson, AZ
Wed Jun 22, 2011
Maurita, Hello again-
Not too many Banks are offering lot loans these days. However, we just did a lot/construction/permanent loan package with National Bank. Yes, in this partiuclar case, the lot value was counted in on the down payment.
It is best that you speak with a Mortgage Lender so you will get the current requirements & interest rates of today's loans. They seem to change their rules everyday. If you need some names and numbers, I would be glad to suppy them to you. Just let me know.
Joy Richards/Paul Bates, REaltors
ERA-Young REalty & Investment
0 votes
Zune Forsberg, , Payson, AZ
Wed Jun 22, 2011
I see you are interested in buying a lot, and building in Payson. The coordination of buying the lot, working with a reputable builder, the city of Payson Building Department, and a realtor is an area of real estate in which I have had extensive experience here in Payson over the past 17 years. If you have not yet commited to a realtor and a builder, I can help you with that. There is also the question of whether to build, or buy something that could fit your needs, and your dreams as well. We could start by identifying your dream home for retirement and looking at both scenarios. I will be happy to work with you on this. Please do call me at 928-978-9100 or e'mail me at zuneangel @yahoo.com.

I look forward to hearing from you.

Zune' Forsberg
Associate Broker
4 Seasons Realty

Payson, AZ
Web Reference:  http://paysonazhome.com
0 votes
Roswell Moore…, Mortgage Broker Or Lender, Scottsdale, AZ
Wed Jun 22, 2011
Hi Maurita,

Yes, the value of your lot is included in your total "as built" appraised value of your home.

Good luck with your new adventure,

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund, in-house, FHA (w/a 580 score), 203k, VA, USDA, Jumbo, Conventional, loans to Canadians, Australians & other Foreign Nationals, on time. NMLS ID 263779 | AZ BK 0903725
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