 You
need construction-to-permanent financing
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 Dear
Dr. Don,
I am buying land and only owe eight years on it. I want to start
building my house on it. Can I do this and not refinance my property?
I want to get a loan only to build the house.
-- Maricruz Mortgage
 Dear
Maricruz,
A construction loan will get the house built, but unless you're
paying that loan off in cash, when it's built you'll need to replace
the construction loan with permanent financing. Mortgage loans are
secured loans, meaning if you don't make the payments the lender
can foreclose on the property and sell it.
Nobody is going to take possession of the house and
move it, so the lender needs to secure the use of the land that
the house is on, as well as the house itself. I might hear from
a real estate attorney how you can finesse this issue, with some
combination of a land lease and a trust arrangement, but without
that level of complexity and expense it just isn't going to work.
I don't know your motivation in not wanting to refinance
the property, but it's not realistic, given the information you've
presented. A construction-to-permanent financing would be able to
refinance the land, build the house and convert to permanent financing
with one loan closing. Things can get a little tricky in locking
in the mortgage rate at closing if your construction period is expected
to last more than six months, but your lender can explain your options.
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