We are looking to build our next home sometime in the coming year, and I’m just trying to figure out the financials.
We currently own a house worth approximately 180k. We owe 95k on it. We have 20k in cash, and an over 800 credit score. We purchased land 2 months ago for 50k. To pay for that, my parents have lent us the cash at 2% interest (far lower than any equity loans). There are no liens on the land.
The builder we are planning on using has given us a total build price of approximately 215k. Therefore, the approximate value of the house and land will be around 265k. For the construction loan (we are planning on doing construction to permanent) how much cash will we need? Assuming an 80 LTV/LTC would require us to bring 53k in cash/equity correct?
Does anything need to be done to pay off the loan on the land, or can that be taken care of further down the line (after the new house is completed and the existing house is sold)?
Larry
