Am I being played or is this how loans work?

I purchased a lot of land for $57,000 with my own money. Fully paid off at once.

My loan officer told me that with my information and income that I can either do 10% for which is approx. the value of your land your final value can be 480k or 20% which is your land plus the rest in cash the value of your home can be 550k.

I chose the 550k loan amount and after my builders sent the building proposal to the loan officer (which totaled to exactly $550k) he said “This is higher than what we have discussed. To do this you will need to put down 25% instead of 20%.

25% = $151,750 – $57,000 (lot equity). Total of (with closing costs) approx. $101,000″

The price breakdown clearly states 550k on the total so I asked what he ment by higher than what we agreed upon and he said:

“Yes, if the “final value” was $550K. Final value is the “cost of building” plus the “value of the lot”. A cost to build of $550k plus 57K for the lot equals $607K.
To hit a $550K final value your cost to build needs to be $493K. (493K plus $57K=$550K)”

I was under the impression that $550k was the loan amount and that I could use the value of my land as part of the down payment since I already own the land. I don’t know if this is common practice of not but why including the land value in the loan amount is absolutely beyond me. I am applying for a 550k loan not a 607k loan.

submitted by /u/Cn900q
[link] [comments]

I purchased a lot of land for $57,000 with my own money. Fully paid off at once. My loan officer told me that with my information and income that I can either do 10% for which is approx. the value of your land your final value can be 480k or 20% which is your land plus the rest in cash the value of your home can be 550k. I chose the 550k loan amount and after my builders sent the building proposal to the loan officer (which totaled to exactly $550k) he said “This is higher than what we have discussed. To do this you will need to put down 25% instead of 20%. 25% = $151,750 – $57,000 (lot equity). Total of (with closing costs) approx. $101,000” The price breakdown clearly states 550k on the total so I asked what he ment by higher than what we agreed upon and he said: “Yes, if the “final value” was $550K. Final value is the “cost of building” plus the “value of the lot”. A cost to build of $550k plus 57K for the lot equals $607K. To hit a $550K final value your cost to build needs to be $493K. (493K plus $57K=$550K)” I was under the impression that $550k was the loan amount and that I could use the value of my land as part of the down payment since I already own the land. I don’t know if this is common practice of not but why including the land value in the loan amount is absolutely beyond me. I am applying for a 550k loan not a 607k loan. submitted by /u/Cn900q [link] [comments]

<a href="Read More“>View Full Article

Need More Commercial Real Estate Leads?SAVE 40% this month!

Our commercial valuation calculator was created to evaluate commercial real estate. In 6 quick steps you will know your NOI, CAP RATE, and IRR.

Now you can get your own branded version of our calculator!