I own a house on the middle of 50 acres. Cut the old one down (leaks, rotten sills, 7′ ceiling upstairs, etc.) and started from the ground up a few years ago.
Working alone and as fast as I can given a full time job, helping raise a little one, adding a new bath bump out for my mom, etc.
Three of us living comfortably in the 1,000 sq ft second level for now.
No construction loan, just buying materials when needed and as funds allow. About done with the outside. Inside, no finished flooring, trim, missing some doors, etc.
Realistically, about 75 percent done.
Fixed rate mortgage is two or three points higher than current rates. I want to refinance but have had two rejections from local banks because the place is unfinished.
They indicated that the new regs for mortgages are much stricter than before. Kind of frustrating because the land alone could be sold for twice the amount of the loan balance. Don’t think any lenders don’t factor in the land, maybe a couple acres.
Anyone see any viable solutions other than get the house finished asap? Can’t afford to hire pros to finish. Might be another year…then I get to tackle the barn.
Todd
Replies
Subdivide the property, and take a loan against individual unimproved lots.
Also, I think the Department of Agriculture still has loans programs for building farm structures, including "Farm" homes.
HUD also had a program of loans for building rural homes.
Depending on what is growing on the property, and it's location you might be able to get paid to put it into a conservation easement.
Jigs,
"Subdivide the property, and take a loan against individual unimproved lots."I have someone begging to buy a little acreage that is unimportant to us, but found that getting the bank to sign off with us getting the proceeds was problematic, again because of the unfinished house/blemished asset. Comments?
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"Also, I think the Department of Agriculture still has loans programs for building farm structures, including "Farm" homes."I will look into that, thanks.
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"HUD also had a program of loans for building rural homes."Ditto
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"Depending on what is growing on the property, and it's location you might be able to get paid to put it into a conservation easement."Yeah, there's a green put aside program here in PA that sounds great. Haven't pursued but unclear what that has to do with the original question. Thanks, Todd
Generally, landowners are paid to put properties into conservation easements. It could generate enough of a cash payment to purchase the materials required to complete the work, without additional financing. Sometimes there is one lump sum payment, but frequently the property owner gets an annual payment. While this isn't a refinance of the property, it could generate cash flow to work with. And, that could give you the cash to finish off the house, and be in a position to refinance. Plus, bringing more money in, is the same as sending less out.
Edited 4/30/2009 7:52 pm ET by Jigs-n-fixtures
That probably won't work in this case.It puts a restriction on the property that the bank probably won't allow and the group paying for the easement would probably not go for it as there easement would be 2nd the banks lien and would be wipped out if they forclosed.To Todd -There is a HUD loan program for buying homes that need repairs. The loan is for the repaired value and the extra funds are held in escrow and paid out similar to a new construction loan.They might not allow this for an existing owner. And being a HUD (or FHA) program the rates are probably reasonsable, however the different fees, including stage inspections, might run up the cost.
.
William the Geezer, the sequel to Billy the Kid - Shoe
The way banks think is "We can't foreclose if you stop paying if the house is not in a finished condition"
Take some pictures to a small more local bank, you may have a better chance. All the big banks are "machines". You need a personal touch on this.
Other option is a cridit card advance, or balance transfer. DON'T use the card after the transfer! The lowest charge is the first to be paid so any higher charges add interest quickly.
US,
Thanks but paid off all my cards years ago and ain't jumping in with the sharks again. Debit card when needed only.Todd
Most low interest credit card transfer offers (0%) stipulate that the user make at least two purchases a month.
They are the ones to avoid!
Its all about the small print!
Maybe join a credit union in the area?
"Preach the Gospel at all times; if necessary, use words." - St. Francis of Assisi
No, I didn't vote for him; but he IS my president. I pray for the his safety, and the safety of his family every day. And I pray that he makes wise decisions.
Steve,
Don't know anything about them. Have a minute to expound on your reasoning?Thanks, Todd
Here that takes a construction loan. We built with what's called a "wrap". One closing funds construction and then automatically turns into the "take out", or permanent, financing.
I'd recommend talking to some smaller local banks. Ask some local real estate brokers who handle rural property in your neighborhood who they'd recommend for your situation. You might also talk to some local mortgage brokers, but here the local banks act as mortgage brokers if they can't make an in-house loan.
Forget the big loan outfits.
Advertise for private financing. Even if the commercial lenders won't loan, if you have substantial equity in your place and a steady income, someone will loan to you.
Shop. Shop. Shop. There's a loan out there for you. It's up to you to find it.
Husband,
I am semi friends with a local realtor who may have some resources. You're right, need to work harder on this, got a little discouraged. It's big money (at least for me) over the life of the loan at stake.
Thanks, Todd
If the land is yours, even if there'a a loan on it, I'd looks at Farm Credit. They do business in a lot of States. I think they used to be known as Production Credit. I've heard of 3% money available.
Greg
Yep, they have an office about an hour away. Send an email, didn't hear back, never called. Need to get my arse in gear, thanks for the reminder.Todd
if i see the picture right,you have a loan on the property now,at higher than currret rates?
well first swing ,i'd talk to them,don't tell em nothing about what your doing,they loaned on it before.... anyway tell em your looking at refinancing the property and do they have any loan modification program? and use that phrase.
if they don't ask how they will do on a refinance,maybe charge you a extra 1/2% over current,no cost?
now if that all goes down the tubes,all you can do is start calling around,i got into this same deal with my place,about 75% done wanted to get a loan,it was tough,their afraid you will scoot with the money and the have to finish. mine appraised for 230 iunfinished,and i wanted to borrow 110 and you would of thought i was looking to cash out and sell it to them,very frustrating.
what i don't get about this is,i could walk up to your house right now and buy it from you and every mortgage company in the country will loan me money,"it needs a little work"on a fixer upper. i can't make sense of it.good luck
YOU ONLY NEED TWO TOOLS IN LIFE - WD-40 AND DUCT TAPE. IF IT DOESN'T
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"if i see the picture right,you have a loan on the property now,at higher than currret rates?well first swing ,i'd talk to them,don't tell em nothing about what your doing,they loaned on it before.... anyway tell em your looking at refinancing the property and do they have any loan modification program? and use that phrase.if they don't ask how they will do on a refinance,maybe charge you a extra 1/2% over current,no cost?"Part of the problem is that the mortgage is with Nationwide. Treated us fine, IMO, but they are getting out of that side of the biz. Honoring old deals, not making new ones.
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"now if that all goes down the tubes,all you can do is start calling around,i got into this same deal with my place,about 75% done wanted to get a loan,it was tough,their afraid you will scoot with the money and the have to finish. mine appraised for 230 iunfinished,and i wanted to borrow 110 and you would of thought i was looking to cash out and sell it to them,very frustrating. what i don't get about this is,i could walk up to your house right now and buy it from you and every mortgage company in the country will loan me money,"it needs a little work"on a fixer upper. i can't make sense of it.good luck"Maybe a little dense here. Lost three hundred grand plus in a divorce seven years ago. Now no other assets tangible to pledge other than the new homestead. With potential sale of land, plenty but not with unfinished house... can't refinance at a current rate. At least so far. Gonna work on it.Preciate your thoughts, Todd
dont do anything different,pay as you go. it be paid off when you hang the last door
As tight as money is from banks right now, I'd speak with my supplier(s) and explain the situation, asking for materials on credit until the house is completed and a new mortgage can be written.
I did that one winter when I was out of work and had an addition I wanted to do on my home. Asked a friendly, small lumber dealer for credit on some dimensional lumber and plywood, then used up a bunch of culls, bargains and scraps I'd collected.
I paid the lumber bill off in the spring. I've always been grateful to Ron, another small businessman who worked through his own hardships, never forgetting the people in the local community.
I'd also look for a friend or friends who have some time, to give me a hand when needed, with the same kind of agreement.
I'd also look for a friend or friends who have some time, to give me a hand when needed, with the same kind of agreement. but what happen when you help a friend and then they stiff you on the money, not knowing what they did wrong to begin with. at $10 a week they would of been paid off by now.
Central PA? Look for a bank that specializes in dealing with the Amish. They do things "English" banks couldn't begin to understand, especially when there's farm land involved.
Mike Hennessy
Pittsburgh, PA
Everything fits, until you put glue on it.
Thanks to all who responded. I'll post back with the results.Todd
Consumer advocate Clark Howard has mentioned peer to peer lending sites like http://www.prosper.com/I'm just putting this out here for info, I've never used it but Clark is a pretty upstanding guy so this lending alternative to big mega banks may work for some.How Peer-to-Peer Lending Works
Prosper Loans Marketplace is America's largest peer-to-peer lending marketplace. Connecting people to people eliminates the need for borrowers to go through a bank for a loan—and fewer middlemen means lenders who invest their money on Prosper also benefit.
I know this doesn't help Todd in his current situation. And, I don't intend this as an, "I told you so", kind of message.
The message is intended for others who might be considering building their own homes.
Phase the construction from the design phase forward, so that even though your final plan may be a 3200-sf house with 4 car garage, it is built as a series projects started from a core structure that has been designed from the beginning to be constructed in phases.
Why don't you go ahead and "finish" your house? Grab some old used sinks and vanities and toilets and install them. Get a kitchen sink and old base cabinet and set them. Finish your wiring and heat system. Just get the place "primitive finished. If the land is worth as much as you say, the quality of the house is not a factor.