andknapp

Construction loans and credit questions.

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My boyfriend and I are going to build a new house. We were given the land, which can be used as our down payment we have been told. His credit scores are all in the mid 700's. Mine fall anywhere from 590 to 650. Are we going to get a bad interest rate due to my credit? Also, are all of my collection accounts going to have to be paid before we can get a loan?

Any help is appreciated.

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Construction loans are riskier for lenders than those secured by an existing house, so expect stricter requirements in terms of down payment, scores, savings, etc. But it's still possible (happens every week).

You need to contact a local broker/banker who can get specific with you. Having the land will help, it's immediate equity; but substituting for a down payment? I'm not so sure about that one. You will probably still need at least 5% down, it all depends on the lender.

It's also possible that a loan could be done with your BF's score/income alone, in which case your other questions would be moot. There's more to consider than just your score, so it's time to talk to someone.

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Your land will be treated as your "down payment", if it was given to you over a year ago then at current appraised value. Less than that it will depend on the circumstances.

If you can qualify with his income, then should not be a problem getting a construction loan. If you have to have both of you on the loan, then you will probably have to work with a broker that works with someone like Bismark mortgage.

Charles

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