pay off my mortgage to develop my land?

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One Response to “pay off my mortgage to develop my land?”

1. jgmeier93592001 on: 12 November 2009 at 11:09 pm

   If I was your loan consultant, I would recommend that you obtain approval from the township for the subdivision. Depending on how many lots your able to obtain, getting a cost analysis for the building(s) would be the next step. Unless you have considerable cash liquidity, to finance this project, your going to either need to get a HELOC, or refinance with a cash out.

   HELOC’s are excellent since you only pay interest on the amount you have outstanding. Another plus is that HELOC are relatively cheaper to obtain than a refinance cash out. The draw back would be that the prime rate right now is nearly 8.000%. Unless your able to find a company that will give you prime minus 1.000%, your still looking at nearly 7.000% interest.

   If you choose to refinance with a cash out, I would recommend the Option ARM program. No cash out adjustments on this program, and you normally will have a start rate of 1.000% (either over 30yrs or 40yrs). I choose this option for multiple reasons.
   1) Building means that your going to need cash flow options. This is the only program that allows that.
   2) Even if you choose to defer interest towards the principle, this is a small term program project. Any money that you defer would be recoverable either through your appreciation of your primary property, or through the sell of your building projects.

   Once your able to sell property, you’ll have a free and clear property and extra cash in your bank account for the next project.