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Construction Loans

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aDingoamb Guest	Posted: Tue Aug 21, 2007 7:45 am    Post subject: Construction Loans Like 0 Dislike 0 Why do some contruction loan programs require you to have owned your land for twelve months in order to use it as equity?
evolovik26 Community Expert Joined: 15 Aug 2007 Posts: 537 Location: Minneapolis 28.93 Dollars($)	Posted: Tue Aug 21, 2007 12:30 pm    Post subject: Like 0 Dislike 0 This is called seasoning. Its to prevent selling and reselling the land inflating the value of the lot. The bank is making sure that you are not inflating the land value and your intention is to build a house and not make away with the $$. _________________ Eugene Volovik Home Loan Consultant Countrywide 612-481-3127 Conventional, FHA and Commercial Lending in 48 states
carradine Guest	Posted: Tue Aug 21, 2007 12:41 pm    Post subject: Like 0 Dislike 0 Yes one common way which is used to try and stop mortgage fraud.
aDingoamb Guest	Posted: Tue Aug 21, 2007 5:26 pm    Post subject: Seasoning Like 0 Dislike 0 I'm sorry but I still don't quite understand. How does reselling the land inflate the value? I thought normally there was an independent appraisal performed by an appraiser chosen by the lender. Thanks
carnahandavid Joined: 21 Dec 2006 Posts: 238 58.41 Dollars($)	Posted: Tue Aug 21, 2007 6:11 pm    Post subject: Like 0 Dislike 0 Quote: Why do some contruction loan programs require you to have owned your land for twelve months in order to use it as equity? Fannie Mae has this rule to stop several refinances in a year to take advantage of dropping interest rates. Re-refinancing has created problems in the bond market, the reason for that is consumers continue to shop for better deals and average length of home loans have dropped to less than 18 months. These loans are bundled together and sold as income producing securities by Fannie Mae. When someone buys a 10 yr security, it messes things up to have it turn over in 18 months time.
larry Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)	Posted: Wed Aug 22, 2007 4:02 am    Post subject: Like 0 Dislike 0 Hi Dingoamb, The process of reselling a real estate property considerably at a higher price than its original value is possibly done by the buyer to make a profit. This concept of reselling is known as flipping. This type of property flipping is considered as a fraud because it is artificially inflating the property value by reselling it within a short time after making slight improvement towards it. As a result of flipping, the cost of living at such property is rising considerably. Thus it is forcing the people to relocate to some different places.

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