What is the best type of construction loan/permanent financing?

My husband and I are 30 and 31 and have 3 kids. We%26#039;ve owned our home for 7 yrs and owe 65K plus a 40K equity line. We have no other debt except our 2 car loans. Our house is now worth at least 130K as is. We are having plans drawn up to add a second floor with our own money but would like to know the best place to get a construction/permanent financing loan for the addition. Our credit scores are 787 and 740 and my husband makes 65K a year and I make about 30K working from home. I%26#039;ve heard some online banks have great rates or would it be better to go with our mortage co. (WAMU) or the credit union we have our 2 car loans and equity line from? **Plus, my husband is a General Contractor and will be doing most of the work himself. Will that affect the payouts? Thanks!

What is the best type of construction loan/permanent financing?bank loan

Most lenders will not like the fact that your husband will be acting as his own general contractor, even if he is very qualified. If he has a friend who could be the contractor (at least on paper) it will save you worlds of trouble...

The equity line of credit you mentioned carries a higher rate of interest than a straight home improvement loan. Consider converting it using the same lender.

Some states will not allow more than one equity loan on a mortgaged home. Check with your banker. If that proves true in your state, there is always the possibility of paying off the equity line and obtaining a completely new secondary loan, which can include the money for the addition. Shopping around this type of loan can be very helpful. It can be very differnet from one type of institution to another. Credit Unions may have lower fees, but usually are not as competetive as banks in terms of interest rates. I would highly recommend talking with a seasoned mortgage broker. Even though they probably won%26#039;t offer this type of financing, they will be helpful in giving you unbiased information as to your lowest cost alternative(s) and help steer you away from trouble by saying the wrong things to potential lenders.

If all else fails, you can completely refinance the house with an FHA 203K interim construction loan, or similar conventional loan. They carry 1.5 to 2% higher rates than regular mortgages, but after 12 on time payments can be %26quot;streamlined%26quot; for a super easy refiinance at normal, current rates of interest. There are no other conditions to be met for these types of refinance. They won%26#039;t even consider credit if the payments are timely. It is automatically approved.

Your FICO scores, income and debt ratios are excellent. This sounds very much like a sensible thing to invest your time, energy and money in. You may have to do some shopping around, but it can be done.

However, I would avoid internet lending. I%26#039;ve of many cases that did not work out for myriad reasons; and only a few that have been satisfactory. This is a loan for a bricks and mortar institution. Good luck.

What is the best type of construction loan/permanent financing?

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