If the purpose of a loan is to construct a new dwelling using an existing (mortgage free) dwelling as collateral, is it reported?

The new dwelling will be occupied as his principal dwelling upon completion. The existing dwelling is his primary residence currently and will be rented or sold once the new dwelling is completed.

All of the funds will be disbursed at closing in one lump sum and the loan will be on monthly P & I.


Thanks

Sounds to me like you have a construction-perm loan (1 phase) and would be reported as a purchase on the LAR. But I'm not a guru.

Really need more information on what happens with the loan when it matures, but construction only loans are exempt whether they have one advance or multiple advances.

The loan has monthly amortized payments until it is paid off. It is not a short term balloon.

Thanks

I would say this does not qualify as a construction only loan, more like a construction permanent loan. Based on the information you just provided I would agree with Relax and opine this loan is reportable.


I didn't catch the fact the loan had P&I payments in the original post or I would have agreed with Relax to begin with.

Thanks. Just to clarify, the fact that the lien is on another dwelling does not affect the this loan's reportability as a construction-perm?

A home purchase loan is a loan secured by a dwelling for purpose of purchasing a dwelling. Your loan meets that definition.