Posted to DomeSweetDome by Rich in Suffolk, VA
First off, I've realized that I need more minutes on my cell plan. We don't have a land line, so my cellphone usually has enough minutes if I only call at night or weekends. Well, that doesn't work when you're making phone calls to building departments and bankers and surveyors, so I doubled my cellphone minutes. My carrier also offers 10 friends and family which may also help me if I can predict which numbers I'll be calling the most and keep the list updated.
Second, someone else mentioned doing internet faxing. The cheapest is by fax1.com for small usage. They allow you to pay by the page with no subscription fees. I couldn't get it to work at first, until I downloaded their program to my computer, which installed a fax machine as a print driver. That has worked well for me.
And now for the depressing portion:
I expected financing problems because I have other mortgages (rentals), because it's a single-wide trailer, and because I'm in another state. The one thing I didn't expect was that banking regulations have changed. To borrow from my forum post:
"My lender once allowed me to offset my rentals' mortgages with their rent income if I had a one-year contract. Now they don't even consider the rent income, but yet want 6 months' reserves for each mortgage that I have, including the one I'm applying for. This is crazy! Fortunately, they do allow me to count IRA's but only at 60% and the current market doesn't really help me there either." Additionally, the rental mortgages count against your debt/income ratio. This run-down trailer is really all I can now afford.
Believe it or not, I made it past the new FHA hurdles (barely). My problem is that I couldn't call this my primary residence if I live several states away and won't be moving for a year. End result is the loan was denied. I also called my secondary sources and none of them do mobile-home loans. Next, I added my wife to my loan so that she could call the property as a primary residence. That just allowed the first lender to find new faults with my loan package such as "This is a trailer?" after pulling up the listing. End result is that primary lender, the one I've done dozens of loans with over the last 15 years, clearly does not want to lend me money. This ends my hope for a loan as a single-family residence, which would have given me low interest rates for 30 years. This means my only option is to finance the property as a land loan. The worst part is it took me 15 days to get to this point from the time I submitted my loan application. And I did my homework, too. I called this bank three times before even making an offer to ensure they would give me a loan on this trailer and I even had a pre-approval letter from them. Their original words were "the trailer just has to be habitable with a working kitchen and a permanent foundation". What a joke. I look forward to commenting on their review sheet that I should be receiving soon.
I got some other bad news this week. Turns out the trailer has some issues with flooring and the well breaker wouldn't shut either. This is a minor issue if I'm on site and can fix them, but as it is I would have to pay someone to come out and fix it to get it past the new appraisal requirements (now appraisals have to do indoor inspections of the residence). Even if I do pay someone to correct those issues, the appraiser will likely find new problems for me to spend money and fix. The land loan, aside from minimizing many of my other closing costs, doesn't even look at the trailer for the appraisal and won't force me to insure the crappy trailer which was going to cost me $300 a year. So land loan it is!
My first choice for the land loan was a bank that I routinely do business with. However, the interest rate is near double what I was hoping to get and at a shorter time period of 20 years. End result is my construction timeline (cost driven) just got pushed further out. The extra money ($152/month) I had planned on spending on building materials will now have to be spent on mortgage payments. Regardless, I later found out that this bank won't lend on agricultural land and won't lend on any vacant land that has taxable improvements on it. Double hit for me on this property.
Thankfully I had identified two more lenders who seemed willing to do the land loan. They have even higher interest rates and even shorter terms, which means I will have even less money to spend on construction. After another week working with the two new lenders on land loans, one of those also denied me financing based on the property itself. No real specific details, but it wasn't what they were looking to finance, even with 25% down, excellent credit. I didn't even know banks walked properties themselves...
The last lender, a local bank, however, will extend me credit, but it's a 5-year balloon with 20-year amortization at 7% interest and 25% down. Talk about a budget killer... Can I still build? Yeah, but the timeline for completion will immediately move right if any of my estimates are incorrect. The wife is already taking my two-year guesstimate and saying that it will take me three years.
And we're back to the wetlands issue. Before even looking at this property I researched the Army Corps of Engineer maps available online and didn't see wetlands on this property (in contrast to every other vacant land MLS that was covered in wetlands). However, there is a 2-3' stream on the border that would be considered wetlands. If I begin construction and someone declares that wetlands I would be shut down. So now I'm back to doing a wetlands delineation. Hopefully the delineation will find no issues that will prevent my construction, but it's still more money to be spent. Thanks to the ownerbuilderbook.com advice, I did attempt to obtain quotes from several different soil scientists. Only two responded, but that at least gives me a reasonable range for pricing, which allowed me to talk down one to a good price. Since I now have a loan commitment letter, I've signed the contract for this portion. If it comes up with major wetlands problems on the land, all of this work will have been for nothing.
Once the delineation is approved by the Army Corps of Engineers, I have five years before someone can change it, which would allow me to get the new house built. There is also a question about buffer zones, but I'm still learning about that one. It has to do with whether the stream drains into the Chesapeake or not. If it does, a 100' buffer zone is required around the stream.
One cost savings that I am working on is my survey. I've been advised to get a survey before closing and the building dept. requires a site survey before approving the building permit. I called four surveyors and am getting quotes from all four for the combined work. My plans dept. is preparing a foundation plot early to get it on the site survey. However, the surveyor can't do work until the wetlands is flagged on site.