Construction Loan Appraisal

[DVerbarg]

Am a little hesitant to post this since I did not read all the details of the other posts made and do not want to repeat what may have been already said but here goes anyway...

When we built our current house the bank we worked with attached both the parcel of land the new house was being built on AND the house we were currently living in as collateral, thus avoiding PMI. Once the house was finished and we sold the previous house we then converted to a conventional mortgage. We did have a significant equity ratio on the previous house (100%) which probably made them feel comfortable in combining the properties together.

On another topic within this thread: my Mom works for a mortgage broker and I recall that there is some standard Fannie Mae or Freddie Mac guideline/rule regarding residential loans only working for lots of 5 acres or less. Since mortgages get sold/traded around quite a bit most mortgage companies abide by the same guidelines so they can freely sell mortgages without getting "stuck" with one. My parents refinanced last year (along with what seemed like everyone else) but had a dickens of a time trying to find a finance company willing to refinance their small hobby farm (45 acres). There is only a handful of large mortgage companies who do this in addition to local banks, who may not be as competitive in their rates.

Hope this helps.

 

[dmccarty]

DVerbarg,

I think the banks really want to have a house on 5 maybe up to
10 acres. I know my credit union would only finance small lot
purcahses which is why I'm dealing with the bank. The bank
would finance the origional land purchase.

I was talking to one of my neighbors on Saturday. The had
fun with their bank as well. They have two lots both about 5
acres each. The house sits on one lot. The bank tied both of
their lots togather in the house loan. They did not want this
to happen but by the time the found out it was to late to change
things.

My bank WOULD tie two lots togather ONLY after we joined the
land into one lot.

Go figure...

We are waiting for the Underwriter at this point....

Later,
Dan McCarty