Educate me on construction loans

[Simms]

If you use your existing house as collateral, can you only borrow as much money as your existing house if worth, or can you borrow more to build?

[1TONY1]

That's not a construction loan. On a construction loan the collateral is your new property and structure. An appraiser or bank person will do inspections as the building progresses and you will get draws of $$$ based on progress. It would be less trouble to get $$$ using collateral on something else but that may create problems if you need more $$$ than you can get on that collateral. You can get over 100% home equity loans, but I am not familiar with them.

[Simms]

Thanks Tony. I must have been missinformed. It sounds like I can take $$ out against my 23 acres then. But what if I am still making payments on that?

My existing home is payed off, so maybe its best to go that route.