All Forum Posts by: Sanjiv Mehta

Just for my own understanding, why is mid-construction loans tougher than a loan from the beginning?

Thanks Jared. I bought for $ 1.81 M while the appraised amount was $2 M. Wells Fargo was only willing to give me a loan for 80% of 1.8 which was $1.45M. The $ 1.35M is a typo. The construction cost is coming in around a million. I do have a credit score above 800 and my DTI is only 26%. I am not in a major hurry as I will be able to start construction with the cash that I have but would like a loan to do more such projects in future. One other question is should I put any clause in my contract with the GC that would make it amenable for such loans.

I got lucky with a SFH and got it much cheaper than appraised value in Aug 2020 for $1.8M. Our plan is to demolish the house, build a new there, live in it for 2 years and then sell it and get the $500k tax exemption. We plan to do more such builds in future.

We want to explore financing options. For the $1.8M purchase, I did take out a 80% mortgage ($1.35M) from Wells Fargo. That mortgage payment constitutes around 26% of our combined income. To build the new house what are our financing options in the Bay Area? HELOC or construction loan?

If HELOC what value will they assume when calculating for the max LTV? Will it be the current appraised value, which has already risen to $2.1 M or will it be $1.8M + cost of construction or the expected appraised value after construction which is expected to be around $3.7M?

If construction loan, what are the typical constraints around it? Would it be a loan for only the construction period or a single close construction loan, in which case I will have to forgo the fantastic 2.25% rate that I got for a 5/1 with Wells Fargo.

Which banks are good for such kinds of HELOC or construction loan? Thanks in advance.

Also forgot to mention that this will be a primary residence and I don't have any other mortgage or even loan.

I got lucky with a SFH and got it much cheaper than appraised value in Aug 2020 for $1.8M. Our plan is to demolish the house, build a new there, live in it for 2 years and then sell it and get the $500k tax exemption. We plan to do more such builds in future.

We want to explore financing options. For the $1.8M purchase, I did take out a 80% mortgage ($1.35M) from Wells Fargo. That mortgage payment constitutes around 26% of our combined income. To build the new house what are our financing options in the Bay Area? HELOC or construction loan?

If HELOC what value will they assume when calculating for the max LTV? Will it be the current appraised value, which has already risen to $2.1 M or will it be $1.8M + cost of construction or the expected appraised value after construction which is expected to be around $3.7M?

If construction loan, what are the typical constraints around it? Would it be a loan for only the construction period or a single close construction loan, in which case I will have to forgo the fantastic 2.25% rate that I got for a 5/1 with Wells Fargo.

Which banks are good for such kinds of HELOC or construction loan? Thanks in advance.