Philip, Jen and Peyton's Pages

Flurry of activity on the blog and our land

Well, there is a flurry of activity both on this blog and at our house site…

First, we are in the process of moving Jen’s blog posts from My Green Glasses over to this blog and consolidating.  She is not shutting down My Green Glasses, but between school, work and family, she’s not having the time she wants to devote to blogging.  So, her posts are moving to here and we will continue to chronicle the house build from this site.

Second, the land has had some activity.  Yesterday, our builder (and future neighbor, Harry) located the property corners and flagged those so that we know where the edges are.  He also staked out the edges of our house so that we could see where it would be placed per the plat that Bruce (our designer/project manager from the builder’s office) had drawn.  We were then asked to flag pine trees that need to be cut down – 63 in all (yikes!).  Some were in the way of the house and others in the way of the driveway.  We took out some in the front so that we could have a yard and took out any that had the potential of hitting the house if they snapped.   I know that this seems anti-green to be cutting trees, but its a necessary evil.  We are planning to replace these pines with oaks and maples in the yard.  The number is certainly ominous, but some of these are skinny, small pines.

From the bank to the lawyer

Received word from the bank today that the package is being sent to the lawyer’s office.  I talked with the bank twice about details and I talked with the lawyer to let them know that the package is on the way.  We hope to be closed on the construction loan within about 2 weeks…

In the meantime, the builder has sent the plans to the engineer and the truss designer to have them start on those projects.  The builder is asking about placement of the home on the lot and so I have to look at the county’s GIS maps and decide how far back to place the house.  Decisions, decisions, but we are moving forward!

The bank called and we are approved

The bank called yesterday, and we received our second appraisal.  This time, the appraisal was in line with our costs to build and so the project is back on track.  We are excited to report that Conway National Bank has worked out great for us with our building project.  Given the appraisal results, we are in good shape to handle the cost of the build and anything that may come up, as well as pay off the small amount we owe on the land.  Right now, the feeling of relief is just settling in and we are just now realizing that the project is going to finally happen.  Jen and I had both mostly given up after a bad appraisal, a second bank turning us away and a third bank deciding that they didn’t like the amount of cash reserves we had (and giving no credit for having zero consumer debt!).

A few things that I have learned along this process:

1. Banks don’t care that you are debt free.  When figuring your credit worthiness for a construction loan or mortgage, they want to see that you are less than x% gross incoming to debt with the loan.  Having no additional debt did not help us…  Because banks allow another 10% of your gross income towards the additional consumer debts.  I found, at least in our case, you are better off saving your money than accelerating your payoffs on consumer debt.
2. Freddy Mac and Fannie May loans for construction are extremely difficult to get unless you have large cash reserves today.  While I think construction is the best way to put people back to work, banks or the government seem not to agree because they have made it nearly impossible for the average American to get one of these loans – unless you can put down 30% of the cost of the home.
3. I had to work with local banks on in-house loans.  Although this means a two-time close, and probably higher closing costs, I was able to find terms that were much more workable to our situation.
4. Appraisals are screwy right now.  This has little to do with who is doing the appraisal, and more to do with the market.   There is no delineation between a foreclosure, short sale and conventional transaction for appraisers.  Its all one big pool and so the foreclosure and short sales have brought everyone down (yes, I know — no duh! — read or watch the news).  But, I have also heard that appraisers are also doing their part and being intentionally conservative with the comps that they use on the appraisal.  I don’t know how true this is, but based on what I have been told and the results of our first appraisal – I find it to be true…
5. There is no replacement for relationships.  Throughout the financing process, the places that have worked best for us were the places where the people knew me, knew my extended family (or friends), and knew my reputation.
6. My credit score didn’t really matter…  Yes, I know this sounds really odd, but CNB didn’t care about my credit score.  They cared about my credit file and looked at each account and how it was managed and handled.  Jen and I both had excellent credit scores, and my past experiences led me to believe that these were good enough.
7. Its a tough time for everyone.  Although Jen and I have been largely insulated from the financial meltdown for the last few years, we were greatly affected by it while shopping for financing.

We are extremely excited to be moving forward.

Finally, is it Time to Get a Mailbox!?

So three banks and several months later, we are finally going to build our house. We got word today from the bank that we will actually be building a house. It just doesn’t seem real, but Philip assured me that is it REAL this time. After having laid dormant for so long, just waiting and waiting, I even got used to the idea that we might not be building.

This journey has been an emotional rollercoaster. We had gotten our hopes up and then we were crushed and squished. Our patience was running so thin, we even created options just in case we weren’t able to build. Maybe we could change the plans or maybe we should buy a house…..we went so far as to even print out viable options. While very very tempting, none of it seemed right. Without much of a choice, we waited.

Philip called me today during lunch and said he got good news. However, I didn’t jump up and down with joy, I got upset. I blamed my terrible microwaved Lean Cuisine bowl lunch, but really it was because I didn’t know how to react. I was so overjoyed before, it was like I ran out of it. When I could get my words out to Philip, I cried and cried. I just couldn’t believe it!

Now the next step is signing paperwork – I will be much happier once we do that part!

The first big bump in the road (crater maybe?)

When everyone told us building a house was hard, they weren’t kidding. It is hard to make decisions, it is hard to make choices and it is hard to know if this is the right move or not.

Over the last few months, we have been working closely with Sterling Homes to design our custom home. Not only have we changed our mind a few times about details, but we even got rid of the second floor after we were so close to contract.

We have now moved into a phase of securing financing.  Yesterday, we hit our first bump in the road.  We received word from our first bank that the appraisal was received, but unfortunately, it was over $30,000 less than what we requested to complete our project.  The good news was that the appraisal was completed two ways – from a cost approach which was closer (within $15,000 of our actual costs) than the sales approach.  Unfortunately the sales approach is what the bank would go by leaving us with one less option on our list.

But today, we are discussing our options with other lenders and I’m confident that we will be able to secure a loan package for our build.  Our situation is difficult because of several reasons:  1) it is very difficult to find comparable homes for an appraisal where we will be building and 2) the market is extremely depressed.  Unfortunately, there is no difference in a forclosure that sold for half price and the buyer/seller home next door to it — both become comparables for our appraisal and those short sales and foreclosures are killing everyone.  We are no immune to the market.

Update on the housing project

Jen posted today about our first big bump in the road for the new house project.  Head over to My Green Glasses to get the details on what has happened this week…