Best way to finance a house loan?

Chrystee

Chrystee

Member
We have to finance 100% of our house loan..

The house we were going to build before, said Construction loan was the best, and our payment didn't look to bad..

We have a different company now, and they said construction loan isn't that great, and we should do an 80/20 loan. With this loan, our payment is the SAME even though the house is 30k less.. whats up with that?

Which would be better in your opinion?
 
jazz lady

jazz lady

~*~ Rara Avis ~*~
PREMO Member
Originally posted by Chrystee
We have to finance 100% of our house loan..

The house we were going to build before, said Construction loan was the best, and our payment didn't look to bad..

We have a different company now, and they said construction loan isn't that great, and we should do an 80/20 loan. With this loan, our payment is the SAME even though the house is 30k less.. whats up with that?

Which would be better in your opinion?
Click to expand...

I'm a little confused. Are you building a house?

If so, either you or the builder foots the bill during the construction of the house. If it's you, you do a construction to permanent loan. You pay interest on the money as it is drawn by the builder to construct the house. Once the house is completed, the loan is converted into a permanent loan. The permanent loan can be conventional, 80/20, etc.

This is how we did our house. We bought the property and got a construction to perm loan. We paid interest on the costs as they were added. At the end, we closed on the loan and it became a conventional mortgage.

We're actually looking to refinance shortly because of PMI. If you do not have a 20% down payment, your lender requires Private Mortgage Insurance (PMI) to be paid. In a 80/20 loan, you finance 80% of the cost, then take out a 2nd mortgage at 20% - thus avoiding PMI.
 
Chrystee

Chrystee

Member
Originally posted by Chasey_Lane
Construction! :cheers: You'll be the very first owners and you'll get to pick out your favorite colors and amenities. :wink:
Click to expand...

Well, thats not what I mean by a construction loan.. we ARE building the house, so we do get to pick everything.. Im asking for the TYPE of financing loan to get..
 
Chasey_Lane

Chasey_Lane

Salt Life
Originally posted by Chrystee
Well, thats not what I mean by a construction loan.. we ARE building the house, so we do get to pick everything.. Im asking for the TYPE of financing loan to get..
Click to expand...
I was giving you a :cheers: on the new construction.
 
A

amethyst_babes

New Member
Unless you have the money to pay both your current rent/mortgage plus the construction loan interest (which can be ~$500 a month) then I'd go 80/20.
 
S

SMC20

New Member
If your builder finances the construction, you can get 100% financing via several vehicles including the 80/20 loan above. It will be the same as if (for the most part) you are buying an existing house thru a realtor or FSBO.
If you need to finance the lot, construction AND permanent financing, I'd suggest you go with a construction/perm loan with one closing. Be sure to secure an interest rate up front as they're poised to go up (at least a little) within the next 6-8 months. You'll most likely have to put at least 5% down and do a 80-15-5 (80% 1st mortgage / 15% 2nd mortgage and / 5% down payment.
Good luck!

:cheers:
 
You must log in or register to reply here.
Top