New Home mortgage/loan for Construction -- short term.?
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I am building a new vacation house (2nd house) in PA. I already own the land outright. My current house is paid off (worth $700K)... I have no debt and over $400K in near-cash assets (savings, 401K, stocks). My wife and I earn over $250K/yr. The new house may cost me approx $200K to build. I have $50K cash right now and should have another $50K when I start construction. I need a short-term loan, but more like a line of credit that I use when I need to make payments it and repay every month (not a fixed amount) like a credit card. If I borrow another $100K, I can pay it off in a year. I am not looking to touch my savings, so I do want a loan. Even a $100K loan for 2 years in interest will cost approx. $15K assuming 7.5% APR. What kind of rates am I looking at? What is a good type of loan to get? Should I look for a Home Equity Line of Credit? Traditional Mortgage or Interest only loan and repay off early? Where should I apply for it? My Bank? Online?
New Home mortgage/loan for Construction -- short term.?There may be some type of constructoin loan available for you. I have used (re-)construction loan programs where the bank lends the money for acquisition of a property, and based upon a constructon/rehab estimate you provide, they escrow funds for construction that you draw upon as needed.
So, as phase 1 of the rehab completes, you submit a request, and they disburse funding to you, thereby increasing your principal balance by the same amount. Most of these programs are interest-only during the construction phase and the principal balance is due at the end of the construction phase (6mos - 2 yrs, depending), although one program I used converted to permanent financing at the end of the construction phase for smaller fees than refinancing.
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