When you find the right piece of land, you just know! Mike and I have been searching for that perfect piece of land for quite some time. In August of this year, we found a piece we really liked. It was in a pretty good location- so we decided to talk to a wonderful real estate agent to see if she could show it to us. She did- along with the sellers real estate agent.
The piece was 12 acres, and quite a bit of it was wet- it seemed like wetlands run off. Walking around the area, it was easy to figure out where we would want to put our home… right where the highest spot was, and where it was dry- about 200 feet off the road. The area there was probably 2.5-3 acres of dry land. In reality, we probably could’ve only used that much to build on as the rest of the land was pretty wet.
So we decided to look into it. We put a deposit on the land and began our search for funds. We had already been preapproved for a construction loan through this one bank, so we thought it would be a relatively stream-lined process. WRONG! We went back to this same bank and asked the representative about starting the loan process. I asked from the Get-Go what we needed, A-Z for each step so I could make sure we had it all ready.
In the end, this guy kept giving us half information. We needed ABC and D for the loan application. He never mentioned EF and G. Each bank is different, I know this, but this was ridiculous. I had him repeat to me three times over the phone what he would need from us when we went to go sign up for a mortgage application. He told us: latest pay checks (for Mike it was amounts put into the bank for the year since he is a contractor), bank and savings statements, driver’s licenses, and if available the house plans. Well, we made sure we had everything- even the house design. We had Mike’s brother in law print out a couple of copies so we had one as well. We went to sign the paperwork and we were missing the contractors’ contract (which had estimates of the job at hand), a building permit (really? How can we get that when we don’t even own the land!!), plus a few other things. I even made sure we had the plot plans so if he asked for them I had them. Then when we were discussing costs and closing and time frames, he kept holding information back from us. Mike and I had to pry information out of him.
NOTE TO ALL: ALWAYS ask questions… and question you can think of! It doesn’t matter, it’s always good to know what you’re getting yourself into! If you feel that questions are being skirted around or if you are only getting part of the information… just walk away. It’s better to be safe than put your neck out there.
In the end, after we had signed everything- the bank’s rep told us he would hold it for 48 hours before putting it through. He also told us that it would take 2 months to even decide whether the bank would give us the money to build! Apparently it needed to go through the board for approval and we had to have that contract from the contractor. I called him the next day and asked him to shred everything- that we would be building in the spring instead since 2 months would bring us into October before we could even begin building. Not a good time for New England building by the way! Both Mike and I really had a bad vibe about him and this particular banks way of doing things.
We learned a lot through this process though. Always ask the questions and pry if needed!
We tried other routes to obtain money for this land. The land was nice, big, in a nice neighborhood, in a relatively good place, and it was cheap! We didn’t want to pass up the opportunity! We tried filling out personal loan applications- and were told at first that we didn’t have enough credit history. Ok, I understand. Both of us have had car and student loans… but not like 10 of them. One place also said that I had not been in my current job for long enough (I had just started with MMI not two weeks prior) and I was also told me debt to income ratio was too large…
My debt: well I paid off my Car Loan about a month before I submitted the application- I still have a $90/month student loan and I pay $500 in rent. I make $590 plus a lot more a month- so I’m really still dumbfounded that they thought my debt to income ratio was too large! For Mike, he has no car loans anymore and the only loan he has is his student, which he doesn’t have to pay till 2013! His minimum payment a month once that hits is $100/month. He helps pay for rent too. Again… dumbfounded!
So we scratched our heads and went back to OUR bank and had Mike’s Dad co-sign with us. Two days later I called to see the status and they told me that we didn’t have enough credit history. That was the last straw. I asked how we didn’t with three people, one being a business owner with good credit history (and a lot of it). The guy told me, well you have a lot of credit history… just not the right TYPE.
What the hell does that mean?! Banks now have “TYPES” of credit histories?!
Needless to say, we pulled out of the piece of land we found. I liked it, but it wasn’t Perfect. We got our deposit back since we couldn’t get anywhere with the banks.
Soon after we found that it was impossible to get a loan from a bank (what a joke considering we have little to no debt and extremely good credit!) my Dad calls me and tells me that a guy he works with has a piece of land for sale… 8 acres for the same amount that we were going to buy this other piece for. Bonus- he was willing to do seller financing!
We couldn’t help it- we had to take a look! We walked the property and it’s even better than the last piece. More usable land, with a couple quirks that we will need to work out, but nonetheless, nothing we can’t handle. It must’ve been fate- that’s all I can say.
So, we talked with the seller- also someone that Mike’s family knows and has worked for before. He was pretty pushy (in my opinion) and got us to sign a piece of paper with a good faith deposit (which was sizably larger than normal- and still makes me shake a little), and had a 30 day bracket on there so if we changed our mind for any reason, we would get our money back.
So, we signed it, I gave him the deposit, and we are still in wait for having the closing finalized. It’s November 24th right now. We signed this piece of paper on September 18th.
More to come about how seller financing works and a few things I’ve learned to help protect ourselves through this process.
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