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Wells Fargo for new home construction loan?


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By P in North, FL on 8/10/2004


Has anyone used any of the Wells Fargo construction products? I talked to a rep and it seems good. They told me I wouldn't need a contractor if I could prove my boyfriend had experience building homes. They also say they can approve you without having your plans complete. They seem flexible. I am just hoping for input, before I decide between them and IndyMac Bank.

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By Susan in Middleburg, FL on 10/15/2004


Hi, I just wanted to see who you decided to go with on your loan. I am trying to contact Wells Fargo now (I just read your post and didn't know they did this type of loan). I have also contacted someone who is a sub with BuildMax. Unfortunately I found these programs a little too late, since I just sold my house to qualify for an owner-builder loan... Any info you can contribute will be very appreciated.
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By Kenneth in Lees Summit, MO on 10/15/2004


When I was looking at getting a construction loan, I first started with the "big" guys too thinking this was the best option. However I found the smaller hometown banks to be much more accepting of unusual higher risk loans (owner-builder being one). I also found the service to be fantastic, and much more patient with me since I had never done this before.

I ended up with a bank just around the corner of my current house, and I can't stress enough the convenience this offers. My loan officer was the president of this branch (he has had 22 years issuing O-B loans, success rate of 100%). I could get a loan before my plans were finished, and use the first draw to pay the architect. I didn't do this (I wanted an appraisal and loan amount, and I figured it was better to appraise actual plans than just a concept).

The convenience is great. I walk in, the president and vice president see me through the glass and wave me directly in to their offices, I can get draws anytime I need them (usually my spouse picks them up on her way to work) within about five minutes (or less if I call them first to let them know I am coming in), no scheduling issues, they keep current on my construction project (they inspect it periodically to make sure I am actually getting what I am paying for).

When I was having trouble early in the process selecting subcontractors, he helped me work a process and grading system so that I could compare them, and this is only one example of how helpful they have been throughout the process. One item that has been especially helpful is if I forget to pay someone (oops, only happened once so far), I just send the check (I write the checks, not the bank) and call them to let him know to clear it and I will get the construction draw later.

Essentially I can pay my subs at the job site the day they finish work, call the banker and let him know I wrote the checks, and go in at some later time to complete the paperwork on the draw - you can't beat this convenience. Since they don't service mortgages, once the CO is issued they will sell the paper to Norwest. One closing for the construction to permanent loan.

The most important thing is to select your banker the same way you select any supplier or subcontractor. You want references, price, and service. You will be working with them a lot; make sure you are dealing with someone you enjoy working with and will provide you the service you need at a reasonable price.


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By Susan in Middleburg, FL on 10/15/2004


We first applied at a local bank who does this type of loans, and they are great. Our loan officer is actually the vice president and would really love to work with her, but their requirements are 20% down. We have $10K already invested in the project and with selling our house quickly didn't get as much as we anticipated, so now we don't have the 20%. I guess we should have applied to the bank before spending our cash and used the loan to pay for it. So anyway I have been looking high and low to find a way to start our project by December...

What bank did you go with? We are only what, an hour or so away?

Thanks again for your response and good luck with your house!!


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By Kenneth in Lees Summit, MO on 10/15/2004


Does your $10K already invested count as equity? The banker I am dealing with also required 20% down. But, they counted the land value (I owned it free and clear) along with any other expenses I had already incurred as equity. For example, I paid the architect for a set of plans, and since this was "eligible" cost, this counted toward my 20% equity requirement. I asked this question before I bought the land (I was going to finance the land to keep my cash available to meet the 20% requirement).

The beauty of this is that if there is money left over at the end of the project (like how often does this occur?), I can take any money I have spent out of pocket (e.g. architect expenses paid before I got the loan, interest, utilities) and pay myself. Alternatively if there is money left over at the end of the project, the bank will lower my appraised value to 5/4 of their total investment, perhaps allowing me to appeal my tax assessment to a lower rate. I was hoping to use this lower appraisal as justification to lower my insurance costs (insure to full appraised value with total cost replacement), but my insurance agent said in this situation the insurance company would establish what it would cost to build using a custom builder and do their own assessment of required insurance amount.


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By Susan in Middleburg, FL on 10/18/2004


Yes they said they would count the money I have already invested. I misunderstood them. So that's good, but the one bank that I initially wanted to go with requires the 20% and we don't want to put all of our cash down. Besides we would have to borrow against our investments or liquidate to get it all. We are now looking for programs that are 90% to 100% preferably based on appraisal. The bank that Phil referred me to on this forum sounds great, but they want the loan amount to be 80% of the appraisal and now I am concerned that will be too much. Not to mention out of our qualification range.

I keep telling myself this will all be worth it when we move in!


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By P in North, FL on 10/18/2004


What most lenders mean is 80% of the finished value. They do an appraisal based on your plans, before you build. Owner-building and sweat equity should give you plenty to build with the 80%.

If they are asking for 20% down flat out, move on to other lenders.

IndyMac does 95% for owner-builder (100% if you use BuildMax).

Wells Fargo will do up to 100%.

Bismark Mortgage has some interesting programs. They come highly recommended by brokers and are very flexible with owner-builders.

Fifth Third Bank offers 100% lot loans with a score as low as 640.


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By Susan in Middleburg, FL on 10/18/2004


The local banks that I have found want 10%-20% of the total costs regardless of what the home appraises for. It seems there are many differences and many programs out there. Just finding the right one I guess is key.

I responded to another post today concerning First Federal Bank. Everything sounds good with them and they base the equity on appraisal. He did say that, although for the loan you have to have proposals for material and contracted labor as opposed to sweat equity. We have about $40,000-$50,000 in anticipated savings for work we can do ourselves. So anyway with their program we will have to qualify for a higher loan amount with the hope of not spending it all.

Also I called Wells Fargo and they said they didn't do owner-builder construction to perm loans. The rep said that "they only loan with builders as the general contractor."

Thanks for the referral for First Federal!

Susan


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By P in North, FL on 10/18/2004


I wonder if the Wells Fargo owner-builder loan is region specific. I am in Gainesville, FL. The rep told me just last week, as long as we can demonstrate some competency or experience in building, they would allow us to act as our own contractor.
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By Kenneth in Lees Summit, MO on 10/19/2004


Our bank wanted commitments in material and labor as well. They didn't want to see any sweat equity in the initial estimate. Their thought is that if something happens to me, I better be able to finish the project without sweat equity. They required bids for most of the work. We are under no obligation to use these bids, or to even use these subcontractors or suppliers, and have made changes in both. For work we have done ourselves, our sweat equity pays pretty quickly and is reflected on my spreadsheet tracking costs.

In fact we had to add features to get the bank satisfied that we were borrowing enough money to actually get the job done. They based their loan amount on the lower of 80% of appraisal, or the estimates we submitted. Since the estimates we submitted was less than 80% of their appraised value, we had to add features to get the costs high enough to close the loan at 80% of appraised value. I figure at the early stages, you don't want to artificially limit your loan amount, and several of our costs have gone up due to volatility in the market.


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By Susan in Middleburg, FL on 10/27/2004


Thanks for the info on First Federal. I decided to go with them. Got my application package and everything looks great! I even am getting more money than I wanted, but I can use it or give it back at the end. Their fees are very very competitive to what I have been quoted other places!

Looks like we will break ground soon! Thanks again for your help!!!


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By P in North, FL on 10/27/2004


You are very welcome. I am happy things worked out for you.
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By Jon in Merrimack, NH on 10/12/2005


Has anyone used Bismark Mortgage? Seems they have programs for O-Bs without the need for a GC or site supervisor. Too good to be true?
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By Michelle in KS on 10/13/2005


I haven't used Bismark, but was interested in talking to them... then I found that they don't do consumer loans in KS!  

Well, doesn't that just figure!

!@#$% brick walls I keep running into in trying to secure financing!!!


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By Jon in Merrimack, NH on 10/13/2005


Financing is really a pain, since you're treated like an alien as an O-B. Bismark requires a broker's license, and won't return my emails. One wonders. It will sort out though, won't it?
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By Christopher on 8/29/2016


Good day to you all of you my name is Christopher Miles, I'm from USA, Texas, am very happy as am writing the testimony how i got my loan from this loan lender, i believe God has a plan for me, after i was been scammed of my money by many so called loan lenders, i was deceived and almost thought of taking my life, but God has a purpose for me, if you want to get a loan from any company you have to chose Mike Johnson Firm, when i was first started with him, i thought he was like the rest, and to my Greatest surprise i got the loan of $69,000.00 in my account and that was the Exact amount i applied for in his company, and you that is feeling that there no hope for you? is a lie because if you are interested in getting any type of loan, you can contact him via email, his email is: mikejohnsonfirm@yahoo.com, God Bless you like he blessed me with Mr Mike Johnson by getting my loan after been falling in the hands of scams.

Thanks.
Christopher Miles.


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By Roger in Beverly Hills, CA on 6/15/2019


The local banks that I have found want 10%-20% of the total costs regardless of what the home appraises for.
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