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 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:
- 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.
- 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.
- 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.
- 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…
- 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.
- 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.
- 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.
Over the past few weeks, we have been busily making plans since accepting our offer. We have been looking at rentals and trying to make plans about where we go next and what we do next. All of those plans have been tentative, at best, since we were waiting for the home inspection, the appraisal and other reports to come in on our current house.
We have finished the home inspection, which as we expected, turned up only a few minor items. Many of those items are repaired already and all of those should be addressed by end of next week.
The appraiser has been onsite, and we have not heard anything from the buyer’s side, so we assume that all is well with the appraisal.
So, that brings us to new plans. We have located a rental thanks to a co-worker at HTC and we are looking to taking possession of it around first of next month and begin the moving process.
Now, all that we see left is just setting the closing date, which we hope will be sooner than later. Jen and I are ready to begin plans on our new chapter in life and get things rolling with a builder and bank. We are shopping for a financing package, and those are seemingly difficult in today’s economy. So, with each hurdle we clear, new ones form on the horizon. This is going to be a long process, I’m sure, but I think we are up to the challenge.