Posted on: 14th Apr, 2010 02:16 pm
hi everyone..i have a unique situation and am unsure what to do. 3 years ago my husband and i got a home equity loan on our personal residence to purchase a subdivision lot for 160,000 to build a house. we are now ready to begin building our house and contacted a bank. when we sell we have about 80,000 in equity in the house at that will go straight to the home equity loan. we are then left with a balance of 70000. we have the deed to the lot and banks are telling us that they do not do "lot loans" and will not finance the 70000 even with the deed in hand.
any suggestions? we have excellent credit and no other debt besides our house.
any info would be greatly appreciated.
any suggestions? we have excellent credit and no other debt besides our house.
any info would be greatly appreciated.
Hi Atrain,
Lot loans are hard to get these days. Most lenders would not want to give you loan against land if there is no home on it. If you are planning to build a home on the land you have purchased, you can go for an FHA 203k loan as it eliminates the need for a separate construction loan and a fixed rate long term mortgage loan at the end of the construction. However, it looks difficult for you to repay the home equity loan by selling the existing home. Even though you sell off the current home, there will remain a deficiency of $70k, which I'm not sure how you will pay off.
Lot loans are hard to get these days. Most lenders would not want to give you loan against land if there is no home on it. If you are planning to build a home on the land you have purchased, you can go for an FHA 203k loan as it eliminates the need for a separate construction loan and a fixed rate long term mortgage loan at the end of the construction. However, it looks difficult for you to repay the home equity loan by selling the existing home. Even though you sell off the current home, there will remain a deficiency of $70k, which I'm not sure how you will pay off.