8.17.20
Financing a teardown
Financing a teardown
Sometimes the way to get the home of your dreams is to demolish an old house and build a new one.
What happens when you find a house in the perfect location but its condition leaves a lot to be desired? There are generally two options. Walk away or buy it, tear it down and rebuild. For many people, a rebuild is the best way to get both the location and home they desire. If you’re considering this option, here’s what you need to know about financing.
Finance basics for teardowns
Financing a teardown house is more complex than a standard mortgage or construction loan because the process involves destroying part of the loan collateral—the house. In addition to verifying your ability to repay the loans, a lender will want to see plans for the new house and know who your builder will be. In order to get a loan, the value of the property and the new home must meet the lender’s standards.
A teardown and rebuild won’t be eligible for government mortgage programs like FHA and VA loans.
At Consumers, we offer loans that cover demolition, construction and a standard mortgage once the new home is complete.
One-and-done loan for construction and mortgage
To cover the costs of demolition and rebuilding, teardown buyers use a construction loan. A Consumers construction loan will roll over into a standard mortgage upon completion of construction. These are sometimes called “one-time close” loans because you don’t have separate closings for the construction and mortgage loans. Not only is a construction-to-standard mortgage loan simpler, it can save thousands in closing costs.
Another advantage of a Consumers construction-to-mortgage loan is that it locks in the interest rate for up to 12 months at the time of application. There’s no need to worry about rising interest rates wreaking havoc on your budget because the rate won’t change.
Check local zoning
Before you buy a teardown, hire an architect and commit to a builder, check with local authorities to see what the zoning rules allow. Some places allow you to raze the whole house. Leaving one wall intact may make the permit process simpler in some municipalities. If the home is in a historic district, there may be be tight restrictions that don’t allow major changes. Rules vary from place to place so you must do your homework.
Rebuild to get what you want
One of the best things about rebuilding is that your home’s electrical, plumbing and HVAC systems are all up to date. Plus, you get to live in a home that meets your specific needs for relaxation, work, entertaining and schooling.
If a teardown and rebuild is in your future, contact one of our mortgage loan officers to learn about all your financing options.
Consumers helps more than 1,000 members finance land, first and second homes, and home improvement projects each year. We’d love to help you with a mortgage or home equity line of credit; contact us online or call us at 800-991-2221.
Sometimes the way to get the home of your dreams is to demolish an old house and build a new one.
What happens when you find a house in the perfect location but its condition leaves a lot to be desired? There are generally two options. Walk away or buy it, tear it down and rebuild. For many people, a rebuild is the best way to get both the location and home they desire. If you’re considering this option, here’s what you need to know about financing.
Finance basics for teardowns
Financing a teardown house is more complex than a standard mortgage or construction loan because the process involves destroying part of the loan collateral—the house. In addition to verifying your ability to repay the loans, a lender will want to see plans for the new house and know who your builder will be. In order to get a loan, the value of the property and the new home must meet the lender’s standards.
A teardown and rebuild won’t be eligible for government mortgage programs like FHA and VA loans.
At Consumers, we offer loans that cover demolition, construction and a standard mortgage once the new home is complete.
One-and-done loan for construction and mortgage
To cover the costs of demolition and rebuilding, teardown buyers use a construction loan. A Consumers construction loan will roll over into a standard mortgage upon completion of construction. These are sometimes called “one-time close” loans because you don’t have separate closings for the construction and mortgage loans. Not only is a construction-to-standard mortgage loan simpler, it can save thousands in closing costs.
Another advantage of a Consumers construction-to-mortgage loan is that it locks in the interest rate for up to 12 months at the time of application. There’s no need to worry about rising interest rates wreaking havoc on your budget because the rate won’t change.
Check local zoning
Before you buy a teardown, hire an architect and commit to a builder, check with local authorities to see what the zoning rules allow. Some places allow you to raze the whole house. Leaving one wall intact may make the permit process simpler in some municipalities. If the home is in a historic district, there may be be tight restrictions that don’t allow major changes. Rules vary from place to place so you must do your homework.
Rebuild to get what you want
One of the best things about rebuilding is that your home’s electrical, plumbing and HVAC systems are all up to date. Plus, you get to live in a home that meets your specific needs for relaxation, work, entertaining and schooling.
If a teardown and rebuild is in your future, contact one of our mortgage loan officers to learn about all your financing options.
Consumers helps more than 1,000 members finance land, first and second homes, and home improvement projects each year. We’d love to help you with a mortgage or home equity line of credit; contact us online or call us at 800-991-2221.
Financing a teardown
Sometimes the way to get the home of your dreams is to demolish an old house and build a new one.
What happens when you find a house in the perfect location but its condition leaves a lot to be desired? There are generally two options. Walk away or buy it, tear it down and rebuild. For many people, a rebuild is the best way to get both the location and home they desire. If you’re considering this option, here’s what you need to know about financing.
Finance basics for teardowns
Financing a teardown house is more complex than a standard mortgage or construction loan because the process involves destroying part of the loan collateral—the house. In addition to verifying your ability to repay the loans, a lender will want to see plans for the new house and know who your builder will be. In order to get a loan, the value of the property and the new home must meet the lender’s standards.
A teardown and rebuild won’t be eligible for government mortgage programs like FHA and VA loans.
At Consumers, we offer loans that cover demolition, construction and a standard mortgage once the new home is complete.
One-and-done loan for construction and mortgage
To cover the costs of demolition and rebuilding, teardown buyers use a construction loan. A Consumers construction loan will roll over into a standard mortgage upon completion of construction. These are sometimes called “one-time close” loans because you don’t have separate closings for the construction and mortgage loans. Not only is a construction-to-standard mortgage loan simpler, it can save thousands in closing costs.
Another advantage of a Consumers construction-to-mortgage loan is that it locks in the interest rate for up to 12 months at the time of application. There’s no need to worry about rising interest rates wreaking havoc on your budget because the rate won’t change.
Check local zoning
Before you buy a teardown, hire an architect and commit to a builder, check with local authorities to see what the zoning rules allow. Some places allow you to raze the whole house. Leaving one wall intact may make the permit process simpler in some municipalities. If the home is in a historic district, there may be be tight restrictions that don’t allow major changes. Rules vary from place to place so you must do your homework.
Rebuild to get what you want
One of the best things about rebuilding is that your home’s electrical, plumbing and HVAC systems are all up to date. Plus, you get to live in a home that meets your specific needs for relaxation, work, entertaining and schooling.
If a teardown and rebuild is in your future, contact one of our mortgage loan officers to learn about all your financing options.
Consumers helps more than 1,000 members finance land, first and second homes, and home improvement projects each year. We’d love to help you with a mortgage or home equity line of credit; contact us online or call us at 800-991-2221.
