construction/maybe get new lender (loan officer, approve, credit card, loan)

[GinRinBreeze]

We own our land and are constructing our house. Lender says everything has been accepted by the underwriter except for the appraisal(should come any day).

He also said we would need 20% down/equity. We are waiting for appraisal, but not too many houses in our rural area that have sold similar to the one we are building. People that have land and house stay put and in a 5 mile radius there are not many homes.

The lender also said we should use only 3 acres of our land(we have about 20)

The loan papers say the loan amount is the full cost of the bid to build the house. Does this mean the house and land together must appraise at 120% or does it mean the loan amount will be 80 % of the cost to build the house?

This is important because we do not have 45000 to put down, but will by the time the house is complete. We have about $55000 gross yearly we can save but have been using all the disposable income to get debt free. We are no longer paying off credit cards etc so we can save fast. We did not want to wait because the rates are so good and who knows what is going to happen in the lending world.



Question 2- if we want to use another lender will we be hit by more inquires? They pulled our credit again on May 13.

[TimtheGuy]

You can't just arbitrarily use 3 acres unless the land is parcelled off that way with a legal description covering just the 3 acres. Is there any tillable acerage on this 20? If not why does your lender only want you to use 3 acres?

[mortgageboss]

Do you have any equity in the land? Have you owned your land at least one year? If so, most construction loans will allow the land equity to be counted as your down payment. I would ask your loan officer if this is the case.

[GinRinBreeze]

Sorry, this is new to us so we are quite ignorant on the subject.

The land was an undivided interest that we owned part of. We then bought out the other family members. The other family members were bought off before we decided to build. The lender said we should only deed as little land as we have to in order to meet the 80% loan to value. I said I would not go over 10 acres. He emailed me yesterday and said the appraiser needed to use 3 acres to find the comp. He said if the underwriter approves of the appraisal we would then need to survey out the 3 acres.


Thanks
JW

[TimtheGuy]

So you now own all 20 acres free and clear (no mortgage)? Is there any tillable acreage or commercial enterprise going on, on any of the 20 acres?

[GinRinBreeze]

The land is getting an ag exemption. I will clear some trees and get cows if exemption.

And yes the land free and clear


Thanks
JW