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My husband and I own a property with a a manufactured home on it. The land value is $120k, home value is $30k with a total value of $150k. We owe $70k on an FHA loan. With the land value so high we've decided to remove the manufactured home and put up a stick built. My husband will be doing most of the building himself with the help of his father and brother. We need to figure out the best way to pay off our FHA loan so we can move forward with our own projects. Our FHA loan does not allow us to remove the manufactured home as it is collateral. If we use our savings on hand to pay off our current loan we won't have enough money to start building.
Ideally we would like to find a loan that would allow us to pay off the FHA loan and be move forward with our projects.
Any suggestions on how to accomplish this? A construction loan does not seem in our benefit since we won't be using a specific builder but I'm not sure a home equity loan would allow us to remove our manufactured home. Help!!

  • Is there any value in the home that's there? Does 'remove' mean bulldoze or sell? If you are destroying it, it's just land worth $120k. – JTP - Apologise to Monica Nov 5 '16 at 20:29
  • I'm not sure it's worth selling. So we'll say bulldoze. – Michelle Nov 5 '16 at 20:37
  • Is there a chance you could just "move it to the side a bit" and get on with building your new structure? the FHA will never know. (if incredibly they notice or something - what are they going to do, put you in football jail?) if you could pull it off it would be a great win. – Fattie Nov 5 '16 at 20:38
  • Onsite relocation has crossed my mind... – Michelle Nov 5 '16 at 20:41
  • @michelle - the "golden bullet" is indeed onsite relocation. If you can pull that off you are a massive winner. I would not treat it as a "passing thought" you know? It's "the" magic bullet. You're on a goldmine if you can pull off that "trick". Good luck! – Fattie Nov 6 '16 at 12:25
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You might check if it is feasible to pay off your current home with savings and then borrow against the land. It sounds like you have $50,000 in equity on the land alone (and of course you'd have $120,000 after paying off the loan). So if your savings are enough to build the house, you should be able to borrow enough against the land.

That's the solution that leaps out at me from your description.

I think that it is possible to get a construction loan even if you are the builder. Particularly with the land such a big part of the value. It may be worth talking to a bank about both options.

It is a big task to build a house. Be sure that your husband and relatives have the right set of skills and experience before starting. One of my uncles tried it and ended up selling to someone else. He couldn't get past the local building inspector.

  • Good info. I didn't realize you could get a construction without hiring an approved contracter. That would certainly be the easy way. Building is not new to my family so I feel confident in their skills...though I know building codes are very tight in our area. – Michelle Nov 5 '16 at 20:57

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