what finacing options exist for old farm remodel??

[bws]

we own a 6 acre farm that is free and clear and want to basicly build a new house where there is a old farmhouse [still livable]would we use a construction loan then convert to a fixed??anybody done this before??it would be a 99.9% remodel i guess.bws

[EJB]

I would think that if you own the place free and clear, and it is worth more than you want to borrow, you should be able to just get a first mortgage on the place, as if you were just buying it. Just tell the bank you are going to remodel with it. I am pretty sure a 1st mortgage is going to be cheaper than a construction loan, and be a lot cleaner...i.e. they will just give you a check.

If on the otherhand, you need to borrow more than place is currently worth, and you want to borrow against the projected value of the property, you most likely need a construction loan to get you there.

[Stoneheartfarm]

EJB has it about right. I would add that if you are intending to build a new house, you will probably be required to demolish the old one at some point. And be sure to tell your loan officer what you will be doing, since it may have some bearing on what they can do for you. Also, allow some extra money, since projects usually go over budget. [img]/forums/images/icons/wink.gif[/img]

Steve

[TimSullivan]

In my experience in our area the banks would force you to go with a construction loan and then roll it into a mortgage when the project is completed. That is a little higher interest then I like.

I can understand why you want to build on the existing homes foot print but it would be cheaper to get a home equity loan on the property then build the new house before demolishing the old home. Strictly from the financial end it would be better to build elsewhere then sell the old house and some land. I know that is probably not what you want to do.

[bws]

its too bad they wont do a projected loan value on the new house.i think we could get 100k max as is.probably not enough to build a new [or much] house around here.i here the cost is 50 to 150 per sqr foot.100 being the norm.there might be a way to get a 125% loan??i didnt think i would ever be talking about getting one of these cause i,ve been raised to pay cash for everything but a new house is a little too much to just wing it.good info thanks.bws

[mikell]

A construction loan shouldn't be a problem I buy several places a year that way. Generally no money down.

mikell