Thursday, June 30, 2011

The Craziness


Background: So, when you wanna build a house, you get out a construction loan. It's NOT a mortgage. You go to the bank, you show them your house plans, they have their appraiser look over your plans, and he says, "OK, this house, when it's this particular neighborhood you've chosen....will be a $300,000 home when it's done." BAM! He just *knows*! (side note: Yes, it is cheaper to build than to buy. Just like with most other things.)


The bank says to you, "OK, we'll give you 75% of that value to use to build that house. 75% of $300,000 is yours." And they give you the loan....which consists of like, checks or a card or something that you then can draw from to pay off your excavator, framer, concrete guy, drywaller, take to Home Depot and buy your paint.....and so on.


When the house is built, another appraiser comes from the bank and looks at the ACTUAL house and does another assessment of the home's value for REAL, now, and you get your mortgage somehow magically after that. We're not there, yet. While you're drawing from the construction loan, when the house is slowly being built, you only pay interest at the end of the month for what you drew out of the loan.

So, if we only withdraw $5000 to pay the septic guy in July, we only pay interest on $5000  in July. Yeah, that makes it ok for us to be paying rent all this time, too.

Ok. Here's what the problem is now. We had to do all the planning and drawing up and picking out "stuff" for our house to present to the appraiser BEFORE we could get the loan. We spent literally monthsMONTHS doing this. You-all know how many times we changed plans. I think I posted 3 different floorplans on facebook. Yeah, we ended up going with a larger floorplan because we were told that square footage appraises better than wood floors. So, we picked a bigger house instead of upgrades. Eventually, we will put prettier stuff in there. Ben can do it by himself. He's handy that way. ;)


The glitch happened here: The appraiser called back and said, "Your finished product appraises, according to my professional opinion, at $300,000." Our financial broker said, "The house you chose is going to cost $8000 more to build than 75% of that $300,000."


I get it, I promise, but I'm just.....letting people know why I can't just explain it in a "comment" field on facebook. LOL!

Our Realtor saved the day today. We love him. I think I will bake him a pie or something. After we informed him of what's going on with the loan discrepancy, he informed us today that he thinks our builders are asking a little too much.

So, we're actually having our REALTOR, Joe, who is a Son-of-a-Gun, and pulls no punches, and is ex-military, and very good at what he does, get on the phone with our builders and say, "HEY, YOUS GUYS, the industry standard is not 75 percent, it's 80 percent!" That should help fill that gap between the home's value and the cost of the home.

I believe his exact words were, "They're being too greedy."

Haha. I cannot WAIT to see how this all turns out. Go, Joe!

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