Building on Hold

Well, it’s been a while since I’ve last written- once again.  I apologize, but we’ve been very busy as of late.  Since the last time I’ve written, we’ve told TD Bank to cancel our loan.  Since they couldn’t figure out what was A from B, I don’t know if I ever want to work with them again anyways.  There were two reasons for us cancelling our loan (which was really heartbreaking for me):

1. The appraisal wasn’t nearly high enough, and frankly, I don’t think this company did their job especially after seeing the appeals and what they had to say for missing a bunch of stuff and then not fixing the appraisal itself. 
2. I’ve never been more sick and tired of having to explain things 3-4 times and ask the same question 2-3 times just to have a different answer in the end.  I don’t know if it was a lack of experience on the mortgage specialists’ part or laziness- either way, it was irritating.  I have the feeling it was laziness.  He took forever to respond to me too, which was not professional in the least in my opinion.

We got in touch with the woman we originally spoke to over a year ago now.  She had “retired” from TD Bank and moved to another bank.  I don’t think it was a subtle retirement, just in the way that the branch that we went to talked about her retirement and the way this woman kind of said things.  She’s been doing construction loans for 30 or so years.

We explained to her what happened with her old bank and I asked for her opinion on what we should do.  The bank she works for does a 90-100% construction financed loan, but they won’t be doing this until mid to late June or early July.  She told us that right now, the appraisals aren’t coming in high enough because of the flood of foreclosures on the market.  The worst part is, if we didn’t have to include labor that Mike and friends/family would be doing ourselves, then we’d be in the green, but the bank required us to add the labor because if something happened to Mike they wanted us to have the funds available.  I get it- but really?  Work with us here.  She also recommended that we move our land loan into a traditional land loan instead of it being seller financed so that we aren’t paying a mortgage a month on the land and it may open other opportunities for us.  I don’t disagree with her, but we’d be doubling the amount of principal just on interest if we went this way.  In the long run, it wouldn’t be best suited.  I wish we could find something that would extend our loan to 3 years at like a 3-4% interest rate.  Private investor is the only way we’d accomplish that I think!

Anyways- with all the sad/bad news we’ve received, it’s kind of put a bad taste in my mouth for the whole process in home purchasing.  Mike asked me if it’s gotten me so upset that I don’t even want to build anymore and I told him that it’s gotten me so upset that I want to prove them wrong and throw it back in their faces when we succeed.

It looks like it will take a few years to accomplish this though.  So Mike and his Dad came up with another idea that may help us in both the short and long term.  We’re working on it now, but we’ll see what happens.  I’d rather see this plan succeed before I really let it out there so I don’t have to re-explain myself to everyone on why it didn’t work.  So- if you’re interested, keep tuned and in the next few weeks, I’ll update again.

Appraisal Appeals- Construction and working with Big Banks

I won’t lie- I’m really fed up with this bank that we are dealing with (TD Bank).  When I send them an email, it takes them usually two days to respond.  It’s really quite aggravating- especially since we are getting closer to the closing date.  The stuff we send and do and ask needs to be all done in a timely manner.

Mike and I put together our appraisal appeals.  I wrote 4 pages outlining absolutely everything in our home, what she missed, and I shot holes through each of the houses that she chose as “comparison” properties.  I sent this off to Mike so he could review it and let me know if I misspoke or missed anything.  He then turned around and gave me just over another page that I used for beginning notes since it was a rough overview of everything I had written.

I sent this to the Appeals to the bank first thing on Tuesday, April 17^th in the morning.  We wanted to get it in there ASAP so we could still be on target for our closing date.  I sent them the package with a PDF of our tax bill (before improvements to show them that our land was actually worth more than what we had purchased it for PLUS all the improvements will drive the value of the land up). 

I didn’t hear from the two individuals that Mike and I have been dealing with.  I sent an email on Wednesday morning (4/18) and asked a question about the closing as well since Mike and I had discussed how sometimes there are penalties if the closing is pushed because of the client.  No response.  On Thursday in mid-morning I finally got a response from the Bank saying that we also had to come up with three “comparable” properties that we can give to the appraisal company for compares as well.  I don’t think they understand that there is NOT a comparable house in the area, especially with as much land.  We couldn’t find a single house with radiant floor heat, a metal roof, and ICF blocks- the three big things (among other things like the amount of bathrooms -we have 2.5 and none of the others have over 2- granite counter tops, cherry cabinets, etc.).  Yes, there are houses out there with hardwood floors, carpeting and ceramic tiles- but ours is still unique to the market with the radiant floor heat, metal roof, ICF blocks, stamped and dyed concrete, fully finished basement, etc etc. 

Regardless, I found it humorous that we have to supply up to 5 comparable homes.  Unfortunately, the bank didn’t get back to me until THURSDAY last week, so we had to pool our resources and use Mike’s Mom’s real estate contact to help us find houses that have been sold in the last 12 months that more closely meet our home’s criteria.  It’s really hard to do!  We did find 3 homes that we decided to pit up against ours.  All three sold for much higher than what ours appraised at, but they have much less land.  The three do have a bit more sq ft above ground, and one had a partially finished basement.  The only thing working against us I think is that two of the homes had a garage (which we are trying to build as well, but that’s a whole separate issue). 

Anyways I had revised our appeals and sent the appeals with the tax info and three “like” homes from markets that were closer to us in both distance and market appeal.  I also put in a home that is yet to be sold and BUILT in the next town over, but has a lesser market appeal than our town.

You’ll love this.  Guess how much this less than 2 acre land with about 200 sq ft more above ground and not a finished basement is being asked for…??  $272,000.  Yup!  I think it had a one car garage too though.  Regardless, I added that to the appeals form as well.   

So I sent the appeals on Monday (April 23^rd) and asked the question about closing and its effects on us AGAIN.  Tuesday went by and I was trying to be patient.  Then this morning comes and still no response.  I decided to send an email AGAIN asking for a status of the submittal of the appeals and if this guy had any answers to my questions on the closing.

He FINALLY responds back that the appeals had been submitted, but never answered my questions on the closing.

CMON!  If I did that at work I’d get my ass kicked!  First, for not responding in a timely manner to begin with and second for not answering all the questions posed!  So I thanked him for sending it along and asked him AGAIN on the closing questions we had.

I mean really, is it laziness or are you so busy you can’t get to me?  Either way- at least tell me you are looking into my question- don’t ignore it completely!

/facepalm.  This whole thing is so ridiculous. Hopefully we will get this all straightened out though!

Bank Appraisals- what a bunch of crap

I've been meaning to post about the plethora of paperwork that you'll need to sign your life away on in order to get a construction loan.  Sorry- really haven't had time.

Mike and I have been working on trying to finish clearing the land.  It's been a very laborious process and I think I've formed muscles in places I never had before!  Regardless- we're hoping for just one more day and we should be all set!

One of the things that you'll need to do is get your project appraised.  Mind you- the bank already has the amount of money you want to borrow at hand.  The appraisal place will take your specs, land layout, blue prints, etc to appraise the house.  They'll also take a look at what other houses are selling for in the area.

Well, we got a call today- so I apologize in advance if this sounds like a complete rant session, but maybe you'll feel the same way Mike and I do after reading this.

The cost to build our house (materials alone) is $145,000.  We have lots of upgrades in the house- like radiant floor heating throughout the first floor and the cellar, energy efficient trusses, ICF blocks for foundation for efficiency, Water on demand for efficiency, windows and doors that are rated for efficiency  (do you see where this is going?!).  Regardless, it's going to cost us about $145,000 to build.  Our land purchase was $55,000 and we've put a good chunk of change into it with putting in a driveway and clearing it ourselves.  The driveway project was almost $10,000, and clearing the land ourselves was a couple new chainsaws, some gas, some bar and chain oil, and lots of man hours, sweat, and blood.  So in TOTAL Just for costs, our house will cost us approx $210,000 to build (including the land and just the driveway portion).

We got our appraisal.  Guess what it was?! First- I should tell you that hte bank will only give you 80% of the appraisal.  As it stands right now- we have put $47,000 of our own money into this project.  We haven't gone out to eat in months (wedding/honeymoon not included) and frankly, haven't been "living" at all because we've been spending so much time and money at the property.  This is not a "feel bad for us" rant, this is a "I'm pissed off especially since we've done all this work to get nowhere" rant.

Ok appraisal... $214,000.  WHAT?!  You're telling me that we have to find a crew that will build our house for a grand total of $4,000?!  That's not possible!  You can imagine how we felt.  In order to borrow the money we need to build, we need the appraisal to come in at about $270.  We can work with a little less, but $270 is our magic number.  Regardless, Mike was pissed and my heart fell to the floor.  Mike was so upset, he actually called the bank (for those that know him well enough, you know he doesn't call ANYONE and makes me do all the calling).  Left a nice message to the lady we've been dealing with and told her to call me directly- that he was too po'd to take any phone calls.

She did call me and told me that there was an appeals process we can use to make the company redo the appraisal.  We're going to do it- but Mike talked me out of writing it up right now- and he's probably right- if we wrote it right now, we'd just be so fired up that we'd put things in there just to piss the appraiser off.

We went through all the paperwork- she's missing a whole bathroom on the first floor- she listed it as a 1/2 bath, and she's missing our 1/2 bath downstairs.  Now, I understand that "below ground" is not worth as much as "above ground" but half of our house is still "above ground" regardless, she put our SQ FT appraisal above ground at about $92/sq ft- and for those of you that understand this- this is really low even in today's market.  The below ground... a whopping $29/sq ft- we can't even build the below ground for that cost- so what the hell is this woman thinking?!  She put asphalt roofing- we have metal... the list goes on.  What makes us the most mad is she did the appraisal using recent sales in the "area" which stretched all the way 30 minutes south of us in a crappy neighborhood.  Of the 3 houses, 2 were older than 30 years and one was 20 years old.  Only one had as much acreage as we, and none of them had as much living space.  In total, their finished "above ground" floors ranged from $110- $148/sq ft... so EXPLAIN to me why ours is only $92?!

We are both so mad it's not even funny.  I want so badly to start building our house- but it's like every turn is a road block.

I'll be writing my wonderful message to the appraiser tomorrow to make sure she understands that she appraised our house wrong.  If it costs us $210 total to build, why is it worth only $214?  The worst part is, we gave her everything down to the countertops of what was going in this house.  The houses she used for comparison didn't have half of what we are putting in our house- especially when it comes to the efficiency matter.

This is not how I envisioned our house being appraised.  It makes me sick.  At least I have Mike to hug me and tell me that we will get it solved- and if the bank can't solve it- we're done with them and going with another one.

Oh and if anyone wants to know, the bank we are currently using is TD Bank, and the Appraiser was Powers, Smith, and Associates, Inc in Keene... in case you don't want to go through the headaches we are... Live and Learn- right?

Building love, through the most trivial experiences.

Construction Loan Application- Our Experience

Two weeks ago, Mike and I sat down with the bank.  Now, I know many of you know of the troubles we had with this same bank (different branch) in trying to set up our construction loan.  They plugged everything they needed to into their computer and they were magically coming up with closing costs of over $30,000!  Needless to say we were quite upset about it seeing that we’ve already dumped everything we have into the land itself and the improvements that we’ve made on it (ie the driveway).  Even though we told these two individuals that we shouldn’t have to come up with anything considering how much we’ve already put into the property and the fact that we’ve owned it for over a year, they didn’t do anything about it.  The people we worked with had never done a construction loan before- so they didn’t really understand how they are supposed to work.  Our benefit was that we had talked to a woman at that same bank about a year before and she had given us a bunch of information on what kind of closing costs we’d have and how the construction loan works.  Unfortunately, this woman retired, so we had to go to this set of people that had never done one before.

That was in late February, just before our wedding.  They had submitted our application even though we asked them to hold it until Mike and I could decide what to do.  Once it got submitted, our credit was checked…awesome.  We pulled the application so that Mike and I could get some answers on this stuff before we officially got the application into the bank. 

We got back from our honeymoon and started to set in on this project again.  This time, we decided to call around to other banks, get more information, and make sure that we are covered so that we don’t have to come up with a ridiculous amount of money just to try to secure a loan when we already have put so much into the property.  I called around to a bunch of different banks- many don’t actually do construction loans anymore.  The couple of other banks that I talked to had some very strange and ridiculous rules- obviously protecting the bank, but in no way allowing us to build with a clear mind- it would’ve been a constant worry if we weren’t busting butt.

So- we were back at the original bank.  This time, I talked with this guy (who I actually talked to right after we asked the other two to put our application on hold until we figured out what to do) and he was much more knowledgeable.  He had done construction loans before, but it’s not something they do all the time- which makes sense seeing that people aren’t really building right now.  So we set up an appointment with him for March 16^th to start the process all over again.  Come to find out- he needed to leave so we were sent to a young lady named Betty. 

I won’t lie, we were really nervous because she hadn’t done very many construction loans either and said herself that she would be using Mortgage Support to help her through the process, which is what the guy that we were supposed to meet with, advised.  Mike was pretty tense at first.  Betty was a real sweetheart.  We explained to her everything about the property, what we paid for it, what we put in for improvements, and how long we’ve owned it.  Mike explained that we were told by this woman about a year ago that there would not be a need to come up with anything upfront for a down payment since we had paid so much on the property already (and this was BEFORE we made changes to it!). 

Betty understood and we finally got to a point in the preliminary check of what our closing costs would be.  They looked MUCH better, but still included things like the Transfer Taxes and Title Insurance, etc.  We already paid all that when we purchased the property so why is it on there?!  Needless to say, the mortgage application at TD Bank is NOT friendly if you are looking for a construction loan.  Anyways- we agreed to the closing costs with the understanding that a few items would disappear and we started the application process.

Mind you, at this point, we sat there trying to figure out the closing costs and trying to make the numbers work for about 45 minutes.  I had left work at 2 to try to get back for 3.  Keep that in mind as we go through the next steps.

Betty walked us through the application.  We told her what we were looking to borrow, the value of the land (which we kept saying the original asking price plus the improvements we’ve made), and how much we still owe on the property.  We get to the closing costs part again and it has a ridiculous closing cost again (upwards of $30,000).  What the heck is going on?!  So on the phone with Mortgage Support and we go back through the beginning portion of the loan again to try to fix it.  A woman that works on loans often came into the bank at that point too and Betty pulled her in to try to help as well since the numbers weren’t working for us.  We finally figured it out and the young lady that helped us went to her desk to work on other stuff, and she let mortgage support go. 

That’s when her computer froze- completely locked up.  At this point it was already 3:45 PM and I’m in a panic thinking – they’re going to kill me at work!  So- we had to start the process again.  At this point, we’ve worked the numbers 4 times to get the closing costs to be agreeable- where it’s not $30,000 that we have to come up with.  If we had that kind of money, we probably wouldn’t be asking the bank for a loan- just saying.

So- we start it again.  Had the same problem AGAIN!  Betty called Mortgage Support again and got on the phone with a woman named Amy.  She was good.  What was happening was our land was being counted twice.  We do owe on it, but we put what we owe into the cost of construction to cover what is left over on the land.  That’s not what was messing up the mortgage application- in fact, it was two little BUTTONS that say- is the property mortgaged and is there money owed on the property.  If these are checked, it goes into closing costs.  Ridiculous!  Even Betty said that this was the most ridiculous form for a construction loan and it wasn’t friendly to our type of situation.  I don’t think using that form would be friendly to anyone period unless you were trying to buy a regular home.

We finally got through the process.  They ask some very odd questions like- what’s the value of the project… well what we are going to put into it is this- but it will be worth more than that- obviously.  Well, they want to know what it’s WORTH.  How the hell do we know?  We are not appraisers!  So a rule the bank has is they will support the land + 80% construction costs.  Our situation is different because we already own the land (and we thought this was the best, easiest way to get this done and be ahead of the curve). That being said, we need to have our house appraised at X amount in order to be able to cover what we project our construction costs will be plus the closing costs (which are small, but we’ve dumped every penny we own into this project.  The funny part in all of this is we asked for a loan on a total amount with labor- but we will only be using a small portion of that labor because Mike, myself, and whoever wants to help us, will be doing the work… will you work for Pizza and Beer?! J  Anyways- our estimated project cost is actually much higher than what we need because of the labor that’s built in. 

Regardless, we do need the appraisal to come in high so that we don’t have to come up with ridiculous closing costs.  By the time we gave Betty our life stories and signed away our first born so that we could build a house, it was 5 PM.  I missed three hours of work because the application system that TD uses is not user friendly at all for construction loans.  I thought I was going to die… Got back to work just past 5 and stayed till about 7 to make up for some of the time.  The nice thing is, my coworkers understood.  I didn’t get any real heat and explained what happened to the team manager and he was pretty cool with it.  I still felt super guilty, so I stayed to make up some time, then I made the rest the next week.

This whole process has been a bit of a nail biter since the start because there are SO many unknowns.  And you should see the PAPERWORK involved- holy CRAP!  I’ll make that a separate post- it’s just too much to keep going now.  I think it’s important to know what kind of paperwork is involved in a construction loan so that you understand what is expected.  We went to the bank with everything we thought we needed including specs, plans, plot plans, amort  calc on the land and payment history, the entire packet we received from the closing on the land to begin with- including the title insurance, tax returns, my pay stubs for the past month, ID, and septic approval.  We don’t currently have a building permit- that comes next week when we go to the town for it.

Building our home, one step at a time, learning patience, and loving more.