Interest rates?

LT1JEEP

Well-Known Member
Joined
Jul 25, 2008
Location
HARLAN, KY
My daughter is wanting to build 2000 square ft. house this spring. Do you all think the interest rates will drop by then? Or where to get the best interested rates on a construction loan? She has 20 acres of land i gave her to build on we have leveled a spot the size of 2 football fields almost ready. Like about 3 days finishing the grade but where she want's to build at the ground is solid and ready.
 
LT1JEEP said:
My daughter is wanting to build 2000 square ft. house this spring. Do you all think the interest rates will drop by then? Or where to get the best interested rates on a construction loan? She has 20 acres of land i gave her to build on we have leveled a spot the size of 2 football fields almost ready. Like about 3 days finishing the grade but where she want's to build at the ground is solid and ready.
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Does she have any chance at a VA loan or FHA? Being a federally backed loan they are mandated by law to inform, and honor any rate drops and refi at no cost to the owner. I did it 3 times a few years ago when the orange man was still living in the White House. Dropped from a 4.75 to 2.25. All I had to say was “yes I want to do that” and they did everything else.

I say that to say if she is even close to ready, bite the bullet and wait for the rates to drop. This isn’t a 4 yr car note. It will go down and she can lock it up when it gets lower.
 
I'd look at a construction perm instead of a straight construction loan.
 
If there are any illusions of any significant rate drops they will not be any year soon. If she wants a house she needs to be prepared to pay with the rates we have currently. We may never see rates like we had ever again in our lifetimes, and if we do it will be a long time from now. Rates in the 2 and 3% range were largely artificial from the long term economic policies we had and "healthy" rates are much higher than that. It is not fun to look at it this way but it is much more realistic. If later on the rates drop you refinance if the math works out.

My first (and only, thankfully) car loan was 6-7/8%, my first condo loan was 6-5/8%, first house loan was 5-5/8%. With the house I refinanced three times over the years to slash monthly cash flow requirements to be able to invest in other areas like retirement. Initially my purchases were "sized" for what I could afford at that time, not banking on changes later.

We are wanting to build a new house but decided to wait for a while once the rates popped up so we could focus on saving for a larger down payment which also helps hold the monthly payments at bay. At the time the material costs had sky rocketed and build times were very long, all of that trended back down somewhat and build times are much shorter now (meaning you are paying the variable interest for a much shorter time during the construction phase) so it is just about time to build. We were also saddled with the loan on the land and worked on paying that part down to a manageable level.
 
skyhighZJ said:
Does she have any chance at a VA loan or FHA? Being a federally backed loan they are mandated by law to inform, and honor any rate drops and refi at no cost to the owner. I did it 3 times a few years ago when the orange man was still living in the White House. Dropped from a 4.75 to 2.25. All I had to say was “yes I want to do that” and they did everything else.

I say that to say if she is even close to ready, bite the bullet and wait for the rates to drop. This isn’t a 4 yr car note. It will go down and she can lock it up when it gets lower.
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Watch out, a regular FHA loan has a lot of hidden fees that make it less of a great deal than it seems in the long run.
VA definitely the way to go if possible.
 
OnlyOneDR said:
If there are any illusions of any significant rate drops they will not be any year soon. If she wants a house she needs to be prepared to pay with the rates we have currently.
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yup. A lot of indications that inflation isn't magically going away real soon and I wouldn't count on massive drops in the near future. Them ost you'd be looking at for the year is like 0.5%, and definitely not that much by spring.
 
She is getting married in May they both make good money she is a RN he works for CXS they both have truck payments for about the next 3 years. They have a good chunk saved around 50 plus. We thought about getting it dried in without borrowing and money and let them finish as they go. Between my family and his family we can build the house BUT getting the time it need to build it is getting harder.
WE are looking at all options to help them to get the most bang for their buck and not being in debt for 30 years.. Thanks..
 
RatLabGuy said:
Watch out, a regular FHA loan has a lot of hidden fees that make it less of a great deal than it seems in the long run.
VA definitely the way to go if possible.
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True but was just pointing out it being a Fed backed option meaning they are bound to rate drop options some conventional loans are not.
 
LT1JEEP said:
She is getting married in May they both make good money she is a RN he works for CXS they both have truck payments for about the next 3 years. They have a good chunk saved around 50 plus. We thought about getting it dried in without borrowing and money and let them finish as they go. Between my family and his family we can build the house BUT getting the time it need to build it is getting harder.
WE are looking at all options to help them to get the most bang for their buck and not being in debt for 30 years.. Thanks..
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If you go this route just be prepared to pay for it ALL out of pocket. Most banks won't loan on an owner build. And most GCs aren't going to want to take on a house that has been started
 
LT1JEEP said:
What is the Va?
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RatLabGuy said:
Vetterans Affairs
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Meaning do they have any sort of ties to a veteran of the military who could pull a loan against their VA benefit. It is about the best option out there. FHA loans aren’t bad either if they do some homework and could possibly have some animals on the land to be able to claim Ag exemption… I’m not a pro but I know options are available
 
skyhighZJ said:
Meaning do they have any sort of ties to a veteran of the military who could pull a loan against their VA benefit. It is about the best option out there. FHA loans aren’t bad either if they do some homework and could possibly have some animals on the land to be able to claim Ag exemption… I’m not a pro but I know options are available
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There's USDA backed loans too for rural areas
 
The Fed was forecasting four rate cuts in 2025. As of the most recent meeting, that is now down to two. Both will most likely be 0.25% cuts.
 
drkelly said:
The Fed was forecasting four rate cuts in 2025. As of the most recent meeting, that is now down to two. Both will most likely be 0.25% cuts.
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That seems optimistic based on the slowdown in the housing market. It’ll be interesting to see what things look like a year from now.
 
Loganwayne said:
If you go this route just be prepared to pay for it ALL out of pocket. Most banks won't loan on an owner build. And most GCs aren't going to want to take on a house that has been started
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We know that but i know the loan officers and bank president's to a few of the banks here and have been friends for years. Will talk to each of them before we decide. Plus the land is free and clear no lien on it. We are just exploring the options and see what will be best for them in the long run.
 
LT1JEEP said:
We know that but i know the loan officers and bank president's to a few of the banks here and have been friends for years. Will talk to each of them before we decide. Plus the land is free and clear no lien on it. We are just exploring the options and see what will be best for them in the long run.
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Good deal. I've seen two people I know throw 100k at a house project then realize they needed another 50-60k and the bank wouldn't consider it due to all the permits were pulled my them
 
Loganwayne said:
Good deal. I've seen two people I know throw 100k at a house project then realize they needed another 50-60k and the bank wouldn't consider it due to all the permits were pulled my them
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Permits what are permits? We are rural and that is not a big problem here. But if i need a permit for something i know who to see about that too. Benefits of a small town. Also being over the rescue squad for over 20 + years get a lot of doors opened easy. I have been on the rescue squad for 34 years now.
 
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