Posted on: 29th Oct, 2010 03:35 pm
I have a piece of property I've been making payments on. I plan to build a small home in the spring. Which is wiser financially?
a. Pay off the land, get the deed, and then use the land as part of the down payment?
or
b. Use the cash I have saved up as the down payment, and include the rest I owe on the land in the mortgage?
I would appreciate any advice. Thanks.
a. Pay off the land, get the deed, and then use the land as part of the down payment?
or
b. Use the cash I have saved up as the down payment, and include the rest I owe on the land in the mortgage?
I would appreciate any advice. Thanks.
Hi MIgirl,
If you wish to pay off the land how much yr will it take to accomplish it?what if the mortgage rates increases over a yrs? you need to consider these possibilities as well.As per my estimate now mortgage is lot cheaper and one should directly go for building a home instead of paying off the land first.
Feel free to ask any further query if you have....
DIPA
If you wish to pay off the land how much yr will it take to accomplish it?what if the mortgage rates increases over a yrs? you need to consider these possibilities as well.As per my estimate now mortgage is lot cheaper and one should directly go for building a home instead of paying off the land first.
Feel free to ask any further query if you have....
DIPA
Hi,
Thanks for the reply. I could use the money in my savings to pay off the lot now. That would pretty much wipe out my savings. Then I would have to save more money before starting the building process, hopefully by June. I'm hoping mortgage rates will still be low by June. Do you think that's a sound financial plan? Or is it better to just keep adding to my savings, then roll the balance owed on the lot into the mortgage in June?
Thanks for any advice you have.
Thanks for the reply. I could use the money in my savings to pay off the lot now. That would pretty much wipe out my savings. Then I would have to save more money before starting the building process, hopefully by June. I'm hoping mortgage rates will still be low by June. Do you think that's a sound financial plan? Or is it better to just keep adding to my savings, then roll the balance owed on the lot into the mortgage in June?
Thanks for any advice you have.
Hi,
Thanks for the reply, I appreciate it.
I could use my savings right now and pay off the lot,and that would wipe out my savings. But it would give me the deed to the property. I would have to try to save more cash by June. Or, I could just keep making the lot payments till June when I plan to start building, and try to roll the balance owed on the lot into the mortgage. I hope mortgage rates will still be low by June. Which do you think is the most sound financial decision?
Thanks.
Thanks for the reply, I appreciate it.
I could use my savings right now and pay off the lot,and that would wipe out my savings. But it would give me the deed to the property. I would have to try to save more cash by June. Or, I could just keep making the lot payments till June when I plan to start building, and try to roll the balance owed on the lot into the mortgage. I hope mortgage rates will still be low by June. Which do you think is the most sound financial decision?
Thanks.
Hi MIgirl,
I am not sure how much down payment you wish to make and how much you are saving per month.If you pay off the land first and if you think to build later let me explain what will be the consequences...
Let us assume for the moment that you are planning to build the home with $ 150000.Let us assume that you are putting 4 % down payment.So the down payment amount comes to $6000.If you plan to put aside $ 500 per month it will take 12 months to accomplish the down -payment amount.
So if your vision is only for less than 1-1.5 yrs then I will advise you to go for the pay-off the land first and then save for down-payment.If your saving plan is going to exceed 1.5 yrs then I will advice you to for save first and then take a mortgage instead of paying off the land.
I have taken example only for the illustrative purpose and thus conclusion may vary if you put different figures in to it.
Feel free to ask any further query if you have....
DIPA
I am not sure how much down payment you wish to make and how much you are saving per month.If you pay off the land first and if you think to build later let me explain what will be the consequences...
Let us assume for the moment that you are planning to build the home with $ 150000.Let us assume that you are putting 4 % down payment.So the down payment amount comes to $6000.If you plan to put aside $ 500 per month it will take 12 months to accomplish the down -payment amount.
So if your vision is only for less than 1-1.5 yrs then I will advise you to go for the pay-off the land first and then save for down-payment.If your saving plan is going to exceed 1.5 yrs then I will advice you to for save first and then take a mortgage instead of paying off the land.
I have taken example only for the illustrative purpose and thus conclusion may vary if you put different figures in to it.
Feel free to ask any further query if you have....
DIPA