Things to know before buying a teardown in Arlington, mortgage and otherwise
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Anonymous
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Considering making an offer on a $850K teardown but before we pull the trigger, hoping to hear from those who are familiar with the process
Do we put 20% down and get traditional mortgage, then find a builder to tear down and build and get a separate builder loan? How does it all work? And are there things we should look into regarding the lot prior to purchasing? |
Anonymous
| I would say you are nowhere near ready if you are just asking these questions now. You have a lot more research and preparation to do. |
Anonymous
| I would pick a builder before you consider buying. Have them check the lot and see what they think. The good ones are pretty good at estimating site fees and problems. They should also be able to answer these type of questions. |
Anonymous
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Unless you have an inside track on a tear down in Arlington or the lot is bad, you will be competing with builders who will
Pay cash and close fast with very favorable terms for the seller, such as paying the seller’s Closing costs and not making them clear out the house or yard. Talk to a loan officer at George Mason Mortgage to learn how to structure a construction loan. Remember that once the house is turn down, a large portion of the collateral is gone. They can help you. |
Anonymous
| You should pay cash for home then take construction loan |
Anonymous
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We looked into doing same thing.
I would suspect this is not for you. |
Anonymous
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You can’t have a conventional mortgage on a house and then tear it down; that’s the banks collateral.
You can buy with conventional, then lineup builder and develop plans (spending thousands), then takeout variable rate builder loan, and then pay high mortgage payments and rent until home built and then refinane |
Anonymous
| You can’t tear down a house you have a mortgage on. |
Anonymous
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OP, you don’t sound like someone who should be tearing down a house and building new. You need to do more research and not just be putting 20% down.
As a side note, we just put 25% on a 900k house in N Arlington and are going to pay for some cosmetic stuff out of pocket over time. This might be a better option for you. |
Anonymous
| Some places will allow less down if you build in North Arlington or McLean because of instant equity. |
Anonymous
Actually, you can, we’re doing it now. The company we got our construction loan from bought out our remaining mortgage and it was added to the build loan. To the OP, I’d find builder first and work w them to find your lot. Also, start talking to lenders who handle construction loans to figure out how you would work this. Sandy spring, citizen one, us bank and bbt are a few who offer construction financing. |
Anonymous
| MVB is good for local lending |
Anonymous
| You need to call a lender who does construction loans first. They're very complicated. |
Anonymous
You don’t have a mortgage on your house. Exactly. Instead you have a higher variable rate loan tied to an expensive and variable construction project. Oh. And you need to find a place to live |
Anonymous
Don’t be obtuse. You were trying to imply that OP needed to own the house/land outright to do construction and that’s simply not the case. Our build is almost complete so we’ve long since found a place to live. And our rate is fixed, not variable, and lower than our previous mortgage due to where rates were when we locked. |