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Old 11-13-2011, 09:21 AM
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Originally Posted by franklinscar View Post
Personally I would find a small local bank close to the house site. The kind of bank where you can walk in and talk to the president or senior level executive of the bank. This is not the type of situation you want to go to a Mega Bank for. The interest rate would be my last concern on a construction loan (within reason). You want a bank that will work with you and provide good customer service especiallly in regards to the inspections for draw payments. A good bank will get these done in a couple of days, a bad bank will get these done when they get around to it. Your carry cost on the construction loan is so small for exactly the reason twobyfour said. you only pay on what you've drawn. If you have a good bit of cash, set up your loan, start the house out of your pocket, and only start drawing from the bank when you get low on your cash or get tired of spending it. Depending on the amount of money borrowed, you are talking a $1000 difference on the "lower rate" vs "higher rate". Generally, in your situation, the construction to permanent loan is the way to go and will save you some closing costs.
Good advice if I may add to it. Some small banks don't have the flexibility to offer construction to permanent mortgage. Google 4 sale by owner they have brokers that are pretty sharp on how to get things done. I have used thema few times and got better deals tgen the back even thought about offering. But you can always go to your bank president and have a sit down come to terms meeting. Your current business dealing should be enough for the bank to get right with this. Bankers hate to see any solid account go away in these times