Construction Loan After Chapter 7 BK

[Brandy02]

My husband and I filed a Chapter 7 in May 2011 and received our discharge October 2011. We will eventually be doing a VA loan and I know we have to wait until our 2 year anniversary before we can obtain that. We've reestablished credit history since the BK with one new auto loan and a few new credit cards. Utilization on our cards is pretty good, but I plan to have those paid in full prior to buying a home. We have another auto that we reaffirmed during the bankruptcy and we owe about $14K on that.

 

My question is, what kind of experience has anyone on here had obtaining a construction loan? I'm a little naive to this process, but we plan on building a new home rather than buying an existing. Do I have to do a lot/land loan for the property first and then obtain a construction loan? Will it be much more difficult to get a construction loan than it would be to just do a VA mortgage loan?

 

Thanks in advance for the advice!

[Brian B The Loan Professor]

Are you talkin about buildin a home yourself or buying a planned development and just waiting for the builder to build it for you?

You will be eliible in Oct for VA. VA does not to my knowledge offer any type of loan where you can build yourself. Most lenders have stopped offering an of these loans - the risk was just too high in a declining market. If you do find a lender that will do the loan it may not be govt backed (VA or FHA) so the time line may be loner for a BK.

B

[robjane58]

We recently built a house and the builder did the construction loan and we paid him a substantial down payment that he credited back to us at closing. He did require a preapproval and we started the mortgage process about 30 days from completion.