Archive for September, 2017

September 22nd, 2017

house coins scaleWhat happens if I pay off my lot loan before I start building my new home? This question comes up regularly when I discuss construction financing options with clients. Building a new home can involve securing a lot or piece of land and placing financing to buy that land before the plans for the new home are completed. This lot loan is generally an interest only product if the client is going to have the new construction project completed within a two year period of time. There are times when construction financing will not be entered into until a current home is sold in order to provide the balance of down payment funds for the project. This scenario does happen with some frequency.

Lot loans have no pre-payment penalties, and they generally require only the payment of interest on the debt. Clients sometimes choose to pay down or pay off the lot loan when they receive proceeds from the sale of property. Based upon the amount of funds available I may suggest that the money is used to reduce the construction loan we will be placing to build the home, rather than to retire the lot loan. Both ways work, and I prefer whichever option works best for the individual client’s financial picture.

When cash flows into a project, either for the lot or the construction loan to build the home, credit is given towards the project. The appraised value of the finished product determines our loan to value and the amount of cash needed for the loan structure. When the value of the land plus the build equals total value, any cash investment into down payment will count towards the project. For instance, the down payment on the lot counts as cash in the deal. Paying off the lot in full adds more cash into the deal. As long as the total project cost equals the appraised “as completed” value, any down payment funds or lot payoff count as equity in the project.

Call me at 952-851-8962, or send an email to, with any questions you have regarding the different aspects and approaches to construction financing. I have 24 years of experience, and will be happy to use it to help!  – Randy Cullen, NMLS #326128

Parade of homes is off and running…new construction may be the answer to your housing needs!

September 15th, 2017

9.15 blog picParade of homes is off and running.  Foot traffic, or the amount of people out looking at model homes, is very high. Our low inventories of existing homes are bringing lots of folks out to check out the options at builder models. Buying a new construction home, or building a new home for the ground up, can be the experience of a lifetime.

Let’s look at new construction options. Maybe a client already owns a home or piece of property with a structure on it that needs to be torn down; or perhaps they own a lot or acreage with no structures. Both are scenarios where I can be of help, and builders are happy to work with. Not all new construction needs to take place on a finished lot in a new development – there are ways to build on a less conventional lot. The process for the construction loan is nearly the same in both cases.  We need to consider the value of the land or lot you already own in addition to the cost of the new home.  Value for the completed project is what we are after, as we lend from the “as completed” value.

For a vacant lot or piece of land already owned by the client, we gather plans, specifications and contract from the builder and request for the appraisal to be “as completed.” There is no existing structure that needs to be removed that would cost extra for demolition. The appraiser will give us a value of the finished product on the lot or land you own. We can then use the equity you may already have in the land to minimize the amount of additional cash you need to supply. This is a great way to go, and loan-to-value follows purchase guidelines rather than refinance guidelines. Read the rest of this entry »

There are many events and economic reports that can have a direct impact on the cost of borrowing.

September 8th, 2017

Ever wonder ho9.8 blog picw all the noise around the globe will affect your mortgage interest rate? It is amazing to me how many glass balls are being juggled right now, and dropping any one of them could cause us great pain in the mortgage bond market.

At the top of the list and all over the news is Hurricane Harvey, with Irma following close behind and heading for Florida. Congress has stepped up to fund hurricane relief around the gulf coast, which is great for all those affected. I am sure much more aid will be needed, but this is a good start. The stock market was happy about the news of hurricane relief as it also came with a three month extension of the US debt limit, keeping the government funded through December 15th of this year. The mortgage bond market lost a little steam as investors moved to stocks, which led to slightly higher interest rates. Money is always in motion, so watching where investors place their dollars will give you a good indication of how rates rise and fall.

Another example that caused turmoil in the markets – tension over North Korea’s testing of nuclear weapons. These actions have posed a direct threat to the region and rattled global markets. Just the thought of any kind of nuclear event is too great to imagine. We hope for the best outcome and a peaceful solution, which would help stabilize global markets and lead to improving both the stock and bond markets (higher stock prices and mortgage rates remaining low).

When you hear comments from the Federal Reserve Chair or the response from a Fed meeting, take note of what they did and listen to what they say. The market reaction to actions or statements can make your cost of borrowing more expensive. Markets move on fear, and adjust to reality once the dust clears… Always look at the big picture!          – Randy Cullen, NMLS #326128


2017 Fall Parade of Homes is almost here!

September 1st, 2017

parade of homesThe Builders Association of the Twin Cities is kicking off the Fall Parade Homes September 9th at noon. You are invited to tour 406 new construction homes during the run of the parade from September 9th to October 1st. Homes are open the first week end from noon to 6PM, then each Thursday through Sunday through the remainder of the parade, noon to 6PM .

Buying or building a new construction home can be a dream come true. With mortgage interest rates remaining low, it may be the time to look at how affordable a new home could be. There are so many added benefits that come with new construction – everything is new and under warranty which is a big plus. New homes are full of the latest technologies to enhance safety and security for your family; and they are built with a variety of energy efficiencies that ensure heating and cooling costs are lower, while improving the quality of indoor air.

This Fall Parade of Homes will showcase prices from $175,000 to $2,285,000. I just picked up my Parade guidebook at a local Holiday Station store, but you can also go to for the online version. You will find the map that shows the location of all 406 properties. With the shortage of existing home inventory, this could be the perfect time to plan your next move…into new construction! Take advantage of the top price you could receive from your current home and use that equity to move your family to the address you always wanted.

Don’t forget your mortgage pre-approval. We are online and paperless these days with a mobile application to download right on your phone. How easy is that? As always, you can come in, call, or click. We are always open on the web. Happy house hunting!

– Randy Cullen, NMLS #326128