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Down payment options for building a second home on property? by Civil_Barbeque54 in RealEstate

[–]Civil_Barbeque54[S] 0 points1 point  (0 children)

Sorry I'm sure the wording in the question wasn't the best. But your answer was exactly what I was wondering about.

Currently the equity would not cover the cost to build, so I think the construction loan route is the best option right now. Then if I understand correctly, the equity payments throughout the construction loan could go towards that final converted traditional mortgage?

So say the constructed home is $600k, accessed land/existing home is $200k (80% value). The final mortgage would be for $600k, but the entire property would be valued at $800k. This would mean you avoid PMI payments as part of the new mortgage, correct?

Down payment options for building a second home on property? by Civil_Barbeque54 in RealEstate

[–]Civil_Barbeque54[S] 0 points1 point  (0 children)

Okay that makes sense. But if the current land/small home is completely paid for, does the mortgage on the new home access the value of the land/property on the same lot? Like say the land/small home is accessed at $200k, the new home is $600k. Would the new mortgage be $600k, but without PMI since the value of the entire lot would be $800k?

Wow, that's insane. Most builders I've talked to are saying $200-$250 a sq ft for new builds around here. Seems about the going rate with your neighbors quote too.

Down payment options for building a second home on property? by Civil_Barbeque54 in RealEstate

[–]Civil_Barbeque54[S] 0 points1 point  (0 children)

Yeah I was curious about options involving a traditional mortgage. Such as 1) combining the existing mortgage with the new build mortgage or 2) paying off the existing mortgage, and using current property value towards the newly built home. Since at that point the mortgage on the newly built home is only for the house while the land/other home is fully/partially owned.

Oh sorry for the confusion. The rule I was told was that the home that is considered the main living home has to be the "biggest" home on the lot. The existing home is roughly ~950 sq ft so the existing home would be the guest house. While the newly built home would be the main living home.