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Craig S
02-05-2010, 11:31 AM
I'm about ready to close on interim financing to start building a small house. Just found out the bank is charging 17.11% plus the 1 point fee ($1500) on a 5 month note. My hometown bank. I own the waterfront lot. This hit me as outragous.

Q: Is this normal rate for interim financing? I'm a teacher, so what do I know...not much.

gcarter
02-05-2010, 12:27 PM
Can you find a bank that will do a single closing and take the value of your property as the down payment?
It's been years, but that's what we did.
Your monthly payments will only reflect the construction money taken as draws.

Craig S
02-05-2010, 12:41 PM
I'm set to close the 9th. The day after plans get approved. I didn't realize about the single closing...Thanks..I'll check into that.

I had first tried to refi my own house (late summer/early fall) - thinking it would be the simpliest/cheapest, but couldn't get quite enough equity out at the time.

Its not that much money due to the length of time, but it all adds up!

Thanks for your thoughts.
Craig

VetteLT193
02-05-2010, 02:33 PM
Are you building yourself or do you have a builder?

If you have a builder ask them who they have used in the past. There are plenty of ways to do it... construction perm loan, builder loan, etc. But, what it sounds like you might be getting is straight up cash up front. the other loans are set up to where the bank has to approve each stage of the building and only lets out money when they say so... that makes it longer to build because you have to schedule them too.

Craig S
02-05-2010, 03:32 PM
I can't get ahold of the lender, but called the title company.

Geez, I feel like a fool. the apr is 17.118. I guess that includes everything.
The promisary note is for 7.5%.

and to think...I'm a teacher. (holding head low).

Thanks for ya'lls input.
Craig

Conquistador_del_mar
02-05-2010, 06:38 PM
When I built my boat storage business, I got a finance package to cover the costs of building that I could take in increments like stated above. It was set at the rate that we agreed - not much above any commercial loan % at the time. I didn't have to start making payments until it was completed in 5 months. The rate you stated sounds incredibly high unless your credit rating is not good. It sounds like you might try some alternative finance companies to get a better rate - especially since it is residential. Bill

Craig S
04-08-2010, 11:28 AM
Some problems, but basically coming together...
its a townhouse lot (25' wide)...the house in the pics is the house next door. There's a vacant lot on the right side.