Construction Loan Exit Options

[Chase Brumfield]

Hi folks,

My wife and I have a construction to permanent mortgage loan on land+home where we intended to build.

Unfortunately, we found out that unexpected foundation work due to soft soil would likely make the project use triple our contingency reserve before even breaking ground.

We are exploring our options on how to transfer our current financial obligations for this construction loan to some other loan offering (as moving forward with the project is now too financially risky). We requested a payoff statement today and should be receiving it in the mail within the next week (just to understand the details). 

We are expecting it to be ~$137K.  Has anyone been through this before?  What are possible options to transfer out of this construction loan?  We spoke to the lender but they weren't much help beyond saying "you've got to find a way to pay the 137K".

All thoughts much appreciated.

[Dustin Tucker]

Hello Chase,

I'm sorry to hear about your situation, you basically have the following options.

1. Pay off the existing loan (which I understand isn't an option)

2. Sell the property, you already have plans, it might make for an advantage for someone.

3. Redo your budget and get a new construction loan from a different lender. As long as the appraisal will support it, you can get it refinanced. I recommend this option, as just sitting on the property with no income is a drain on you both financially and mentally.  And once the house is finished, you have multiple options for refinacing and selling the property.

Let me know if you would like a term sheet for a construction loans, thanks, Dustin