home equity on land value?

juliatallmadgeMay 2, 2008

does anyone know if it's possible to get a home equity loan based on the value of the land (not the home)? we're trying to figure out the best way to finance a rebuild after a major housefire. we know there will be a differential between what the insurance covers and what the cost will be. if it's a smaller amount i was wondering if a home equity loan would be possible, thinking that might be preferable to a full out construction loan. with thanks, j.

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HEL's are granted based on many factors, not just the value of one asset. Your credit is looked at going back some time, your employment status, age, various assets, and property I think is just valued as that, not necessarily the nature of it (except from the viewpoint that it might be either unsaleable - i.e. in a terrible area, or full of urea formaldehyde foam, etc., but you need to speak to your bank for particulars about what their loans are based on, and many other aspects of them.

    Bookmark   May 2, 2008 at 5:12PM
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Hi Julia,
The 1st answer is "maybe"... but not likely very much.

The better answer is; Why not apply for a renovation/construction financing? Then you'll be able to borrow based on the anticipated value of the home after completion, which makes a lot more sense.

Dave Donhoff
Leverage Planner

    Bookmark   May 2, 2008 at 6:55PM
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thanks for the responses. i have a mtg with a loan guy on monday. i'm just trying to weigh all the different options... the construction loan is the obvious choice, but the way i understand it is it's one loan (closing costs etc.) while you're building and then it rolls over (or into) a mortgage- potentially at a different interest rate and with other closing costs to bear. if it's a large amount, that may be the only way to go... but i thought a HELOC was worth asking about bc it seems to maybe offer more flexibility....

    Bookmark   May 2, 2008 at 7:54PM
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