Construction Loan Officially Approved

by J Scott on June 3, 2014

It’s been three weeks since our construction loan was conditionally approved, and today we got the final approval. The fact that we’re self-employed, the fact that we’re getting a construction loan instead of a conventional loan and the fact that we’re building the house ourselves have all contributed to the approval process stretching out, but we’re now scheduled to close on the loan in about a week.

The big question now is whether the permits will be approved before the loan is closed? It doesn’t really matter either way, but getting the loan and the permits in the same week would be very nice, especially given that we want to start demo and construction the following week…

{ 3 comments… read them below or add one }

Kevin O'Connor June 11, 2014 at 8:57 am

Congrats on final loan approval. Now the fun begins!


Andy June 17, 2014 at 3:44 pm

I’ve been paging through your blogs, and you have a ton of great info. Also, congrats on buying in Howard County. Great place to raise a family.

With that said, why go construction loan vs. hard money on your own house? Do you use hard money in your flips? We are considering buying a run-down property in Baltimore City, rehabbing it, and moving in. If we buy something wholesale and effectively flip it to ourselves, we can move in with some serious equity. Is this a good or bad idea? The real question becomes financing. Would a 203k loan be the best for this kind of deal, or might it make sense to buy cash, use hard money for the rehab, and then refinance with a convential or FHA?


J Scott June 17, 2014 at 7:21 pm

Hi Andy,

The advantage of a construction loan is that, when the house is completed, it will roll immediately into a 30-year mortgage, so we don’t have to deal with another set of underwriting and another closing (and don’t have to worry about interest rates going up in the meantime, since we’re locked into a rate already). The other advantage is that the construction loan interest rate is around 4%, whereas hard money would be closer to 15%.

If you’re planning to move into the property you would buy for at least one year, I’d highly recommend either FHA/203K for the loan.


Leave a Comment