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Speculation: Are you planning on moving into your new home or selling it for profit.

If you're an experienced builder and want to build a home to sell, banks will look at your project a little bit closer. The reason is because if you're planning on building a home to sell you cannot sell it until it's finished. This is called speculation. Speculation is exactly what the word implies, you're speculating that when the home is complete you will sell it and make a profit.

The problems that can occur are many, such as when the home is completed will someone buy it or will it sit on the market. To insure the home sells the builder needs to make sure all the costs stay in line and the house is what the public desires. Other concerns are location, size of home, design, price, economy etc. So banks want only experienced builders with a speculation track record, excellent credit, assets and cash equity in the project such as paid land.

If you want to apply for a speculation loan be prepared to have:

1. Experience at building and selling with a track record.
2. Description of the project to include all costs, equity, pre-paid's and profit expected.
3. Loan application. Call me and I will send you one.
4. Good credit.

Call me and I will structure your deal so it gets an excellent chance at getting an approval.

I do have a bank that provides speculation loans and is much more lenient than the standard banks but the loan amount has to be below $600,000 and requires up 20 to 30 cash equity.

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