construsction loan & reg loan

[Cheryl in Cali.]

Ive been reading posts on this site about construction loans being anywhere between 1-5% interest rate, but I was wondering how many years do you have to pay this off, can you still get 30 years since you will be paying off 2 loans at the same time? Do the payments start as soon as the construction starts? Also, when do the payments start on the regular loan? After the house is finished being built?

About how long from start to finish does it take for the construction to be finished if there is not a lot of site prep to be done?

Also, everyone talks about the MH dealers wanting money up front for things, (customizing, checking credit, deposits, etc...) what if you dont have thousands of dollars available to spend on this? What various deposits are there, and how much are they for? Do you think they would let me not pay deposits if I come already approved for a loan - not pre-approved, but fully approved?

One more thing, I read a post that said a good quality MH should cost $40-$45 per square foot, but here in CA they dont usually include set-up in the costs, so can a MH that costs $37 per square foot still be high quality? I want a champion Infiniti 280, what is the quality of this home, and is there anything(s) you think I should definately upgrade on it?

That's all I can think of for now!
Cheryl

Thank you! (In advance)

[Threnody]

My construction loan is being rolled over into the mortgage, The only thing I am paying is interest on the principal, and yes, as soon as construction is being done, you will be making payments. Mine were delayed because of the snafu wrong home delivery. The house was up and done in about 2 1/2 weeks.

[Cheryl in Cali.]

More questions to add
1. I would like to know the approximate total cost of all the permits you need. I read $7800 from one person, and $9918 from another. This seems like a high price to pay. If it makes a difference, Im not getting a garage, and the land is just on a regular city street so it has everything ready to hook-up. And its already zoned and flat land.
2. Approximately how much is it to deliver a MH within less then 20 miles? Free? (I wish!)

Thanks!
P.S. Just speak from personal experience on the costs, or if you know a particular dealers cost.


Thanks Threnody

[rmurray]

Construction loans are loans to pay for the home and improvements as the job is done...The 1 to 5% fee you see mentioned here is not the interest rate...They are discount fees charged by the construction loan company...The construction loan will also have interest for the time the money is used...sometimes it is accrued and payed at the end..sometimes they send interest bills monthly while the home is being built...At the end of the construction period the whole loan...principle, unpaid interest and fees is due and payable...Most often...but not always..this whole amount is rolled into the permanent loan with your 1st payment coming due in about 30 to 59 days from the beginning of the permanent loan...

Basically there are 2 types of construction loans...A 2 time close (1 closing for the construction loan and 1 closing for the permanent loan) which has the above 1 to 5% fee plus interest and double closing costs...the other is a 1 time close loan...1 close for both the construction phase and the permentent phase...this type will have only 1 set of closing costs and usually only 1% additional fee for the construction loan..

Something we have not had to worry about in the last few years....but might be an issue in the future..is rising mortgage rates..With a 2 time close..the interest rate for the permenent loan is going to be the rate when you close that loan (this could be months from the time you started your purchase and rates could go up in this period)...It could well be higher than when you looked at the home..resulting is higher payments than you expected..With a 1 time close the rate is locked in at the first closing..you will know the approximate payment then and it will not change...
Complicated and confusing...the best mortgage web site I have ever seen can be found at
http://www.mtgprofessor.com/
It might be worth a little time to learn about mortgages...manufactured home or any type of home...Good Luck

[rmurray]

This varies a lot with location...In our area..GA and SC..actual permits would be as little as $ 25 and as high as $ 600....but you are in CA..the land of high prices...expensive housing...politicians that have never seen a spending plan they did not like...yours will probably be higher...You will have to check with your local building official for accurate information...Permits can often be included in the loan for the home..

In most areas of the country..delivery to your site is included...but then you are in CA...who knows..

[Cheryl in Cali.]

Thank you for the info, I did some reading about construction-to-permanent loans and it said some lenders will give you a 1 year arm loan while the construction is being done (which would be 1-5% interest) and then at the end of construction they simply re-write the mortgage note to a 30 year fixed or whatever the loan you choose is. Here is what I read:

A "single close" construction loan is also your permanent financing. It is not just an interim construction loan, which would require a "take out" loan refinance at the end of construction to put the permanent financing in place. This "take out" loan would involve an additional set of closing costs, you would have to provide new income and asset documentation to qualify, and qualification would not be guaranteed. The best "single close" programs are usually based on a 1 Year Adjustable Rate Mortgage, which has associated with it an aggressive offer to modify your note at the end of construction. The note modification would be to a longer term fixed rate program at current market rates. Being a note modification and not a refinance, there is little or no cost, and the process is as simple as signing a few pages and sending them back to the lender. You are not subject to re-qualifying, and you do not incur the substantial closing costs that can be associated with a refinance.

I found this info at:

http://constructioncenter.indymacbank.c ... ts&pid=HSH

and

http://www.e-constructionloans.com/faq.htm

[InfraRedZX3]

I have a two-time closing construction loan. I was told by the bank at the time of the first closing that the second and final closing would involve only paperwork, but no additional closing costs. I do hope the bank was being honest with me. My closing costs were around $3500.

[Rian]

I came up with my own creative finacing. We bought the land 9 months ago on a 2 year arm at 5 1/4% with a balance of $37000. The cost of the site work, which includes 9ft poured wall basement 27x60 poured floor, well+septic, driveway and all permits comes to 30 thousand, which will be put on our credit card. The rate offered is 5.99 as long as the payments are on time. This allows me to be my own builder, something that the banks wouldn't allow. The cost of going through a builder just to get financing, was almost 15 thousand. I will be contracting all work being done. Once my site work is finished, I will be doing an installment loan for the house which will be 60000 at about 9% highway robbery interest. However no high closing costs. Once the project has been completed I will be shopping for the lowest rate mortage I can find, somewhere around 5.5%, so I will have never had to pay the high interest on 60000. I will also have avoided paying PMI insurance as the 20% equity will be there when completed. You may be wondering why not just get the mortage at the time when your site work is done and then finance the house property and credit card debt. That might be possible, however some lenders are nervous until the house is already on the foundation and you have occupancy which means they will not be offering their lowest rate. Many lendors on the other hand are eager to loan the money at the higher interst rate on an installment loan, and it is much easier to qualify. One thing you should be aware of, if considering the same thing. When you put 30 thousand on your card, your minimum payment, or( long term debt) will be $600 a month. So you will need to use that figure if when using the tool calculator to see how much of a loan you can qualify for.

[Dan F]

Hi Cheryl,
Ca has a cap on what they are allowed to charge for "building permits" on a HUD stamped home. These fee's are minimal in your case without a garage they will most likely be less than $900 which is what my "building fee's" were with a garage. The building fee on just the home is capped at $182.00 so if you do not have a garage you may pay as little as $300 including plan review for your "plot" plan.

what you need to worry about is hidden fee's that you don't know about until you accually go to pay the bill.
For example low income housing fee, in my area this is 2% of your total project budget. School fee's $2.05 per SQ FT (really expensive). Another is enchroachment $100 this ensures you don't damage the street where it meets your driveway. Then your water and sewer hook up which in my area is $2300.00. Another cost is you may be required to get a survey to mark the corners of your property so the inspector can make sure your set backs are correct. this is another $500-$1000. Lastly you may be required to get a soils report for the property which can range from $1500-$4000. A good tool is to find the fee collector for your county ask them what a typical MF home project pays in fee's? they will have a ball park you can base your estimate on.

You may be able to avoid some of these while shopping for land. Do your homework and inqire about the land with the listing agent and your county or city planning dept., ask questions like is there a survey on file for this lot? Is there a soils report on file for this lot? Am I reqired to get an erosion controll plan for this lot? Are all utilities including pwer on the edge of the lot?

Another thing to check on is if your county has some kind of program where they charge for low income housing in new construction fee's. I was able to petition and get this removed from my fee's because I was under a certain income and saved myself about $3800 by doing this. Just do your homework on everything the dealer, the contractor, the manufacturer, and you will save yourself a headache. this is not intended to scare you but Murry is right CA is expensive as you know.

You should be able to at the minmum negotiate the delivery fee for free for only 20 miles. Make sure you shop around the home price also. Call all dealers in the area with the identical home and ask what the base price is? you may get some savings that way.
Hope some of this helps.

[Cheryl in Cali.]

Thanks for all your help guys. I am getting a list of properties for sale this week, and will call the county and ask about the fees, perits, and set back requirements. I'll keep everyone posted. My fiance is getting qualified tomorrow for a loan hopefully construction-to-permanent not the seperate construction and conventional.