HELOC for Construction?

[CottonwoodCanyon]

Hey all, this isn't exactly farm related but I thought some of the "land wiz kids" with more experience than me on here might have some input. I have the opportunity to buy a small chunk of land off market that has a small shop and small house. The land and shop is exactly what my wife and I are looking for but the house is not. It's in good shape and definitely livable but it's simply too small for a growing family. I have good-great equity in the current house and a decent amount of cash to throw at this, and I'm pretty sure would have some instant equity at the price discussed.

My question is, has anyone ever used home equity to build? Any tips? Things to consider or avoid? HELOC or construction loan recommendations? My home/land buying up to this point has been very conventional and not needed to be very creative but this would be something new. The land would be a dream and the price is right, but the house would need to be either added onto or a major renovation of some sort in the very near future for our current life situation.

 

[IowaBowHunter1983]

I always look at it from the perspective of what is the cheapest money you can get. Look into a single close loan- that's the construction financing that rolls into a traditional mortgage once construction is complete.

Another option- Cash out refinance your existing home. That will likely be at a lower rate than HELOC.

Joe is in the lending business- good resource here

@deep woods goat hunter

 

[gjs4]

This is what I had done.....and zero regrets. House was near paid off when opened, could write checks for land stuff and cabins...will cash out refi the HELOC when rates stop going down. RIght now the HELOCs and mortgagees are super close....typically not the case. Zero regrets and using equity for more (as long as you have a bail out plan) is a no brainer.

 

[gjs4]

For what it is worth i will gladly answer any questions publicly or privately.

Contingent sales and preapproval are fine for an moderate market/sales temperament.

Id also equate your standard advise to that of a guidance counselor in HS related to jobs post graduation; Do they really know land...let alone hunting land? Do the math, plan for pitfalls, its your life and money, whether you succeed or fail... but the track record of land investing is good and in the last 4 years has been stellar

 

[T_Max]

My wife and I recently opened a HELOC to do an addition on our current house. We are self-building and it will take a while which is the main reason we didn't go the route IB83 suggested. It really is pretty slick as we have a checkbook with access to funds when we need them and the balance we are paying interest on is only as high as what we have spent to that point. So far we are financing the build with cash (except for one HELOC check to see how it worked), but it is there and ready when we need it.