another reason to not go in debt...

chewie · #1 08/20/10, 03:47 PM

right now, we cannot get a mortgage on our new house. we have it built, and it was hard. i sometimes wonder if we weren't 'suppose' to do this. how can you know???

we need a mortgage NOW. we need to lock it in at the rates, and just get on with paying for it, but our local bank , who has the construction loan, isn't working for us to get a loan, so they can write it in their bank for horrible insterest rates. currently we are paying them the interest per month, (them saying, 'oh but you're in your house aren't you?!' and "you'd have to make that payment anyhow" uh, but the money would be going to pay it down, not just keep us treading) they are skunking us, but just inside the law and nothing we can do. so we need out of this mess yesterday!!! i pray and pray, but nothing is happening. i am very scared of this. what am i suppose to do????

i have begun to skip our local bank, and start doing my own mortgage shopping. i am new to all this, have no idea what i am doing. this really stinks, and just another reason to NEVER go in debt, or at least very big.

if we woulda been younger, or not had kids, i'd done as others have done by building small and practically debt free. but in our situation, we thought this was the best plan. i love our house, its just what we wanted, but doin it this way is turning out to be a nightmare to say the least. its seemed like such a simple good idea, now, not so sure....

taylorlambert · #2 08/20/10, 04:00 PM

Try another bank if you can. An old man that does our truck mechanicing told me one time when I first got my first loan was to get aleast two maybe even three banks with a savings account and a few small loans each. That way if one tried to get ya by the short hairs as he put it you can go to the other one. I did this and myh main bank tried to lay one over on me and I stood up walked out went down the street and ot my loan.

I went in a branch of my main bank to get a loan for a new storage building. I had the cash i nthe bank but wanted to set on it. I told the girl i wanted to use my money in the account as collateral. She popped a tude with me about a short notice. I told her look up what I owe yall Il lbe back with a payoff. Attitudes change in a minute.

TedH71 · #3 08/20/10, 04:35 PM

Open an account with a credit union then establish credit then ask for a loan. They're far more willing to work with you than your banks because they're customer owned and they tend to have more money or different regulations so they can lend more. That's how we have two cars even though my wife is the sole breadwinner at home.

mary,tx · #4 08/20/10, 04:48 PM

I don't know how it is there, but here in Texas, regular banks will not loan if you have much land. Over five acres, you go to the Land Bank. I'd say it's time to start making phone calls to see who/what else is available.

ronbre · #5 08/20/10, 05:09 PM

my son is in a mortage that has 6 % and a balloon and the value of his house has dropped by a lot..so he owes more than it is worth, so he can't refi at the lower rates

we are, thank God out of debt

beaglebiz · #6 08/20/10, 05:44 PM

I think the first few years, 90 or 95% of your payment goes to interest anyway. You have to pay over your payment to bring down the principal.
We paid our house off with no pain in about 7 years.

CrashTestRanch · #7 08/20/10, 05:50 PM

Quote:

Originally Posted by ronbre

my son is in a mortage that has 6 % and a balloon and the value of his house has dropped by a lot..so he owes more than it is worth, so he can't refi at the lower rates

Do as Banks and big business do, WALK AWAY ... called a Strategic Default, done daily in the world of finance ...

Quote:

You got to know when to hold 'em, know when to fold 'em,
Know when to walk away and know when to run.
You never count your money when you're sittin' at the table.
There'll be time enough for countin' when the dealin's done.

chewie · #8 08/20/10, 05:50 PM

i looked up mortgage in my area, online, and printed out the 2 pages worth of lenders, and will be calling each one.

as for getting credit, our credit is as high as most have ever seen, and trying to get 'in good' with another place is a bit too late, we need this loan NOW.

for paying the interest, sure, the first few years is mostly interest, but as is, we have no loan, and the only thing this current place will ever do for us is charge interest, or give us a loan for almost double the going rate. we're getting stomped on and can't seem to get out of it--but we'll keep going, its not like we have a choice!!

chewie · #9 08/20/10, 05:53 PM

Quote:

Originally Posted by CrashTestRanch

Do as Banks and big business do, WALK AWAY ... called a Strategic Default, done daily in the world of finance ...

i got that, but go WHERE??!!! that, my dear, is the question!

i am never gonna go thru that bank again, not for any reason, and will tell anyone i can about what they have done to us. we aren't the only ones, either,but they play just within the law so there's nothing can be done, but they know danged well they are burning us to a crisp. and when i say something, i got the run-around, now i am getting the cold shoulder, VERY cold!

Jalopy · #10 08/20/10, 06:03 PM

Have you had an appraisal done? If you have then start shopping other lenders with the copy of your appraisal. When we built in 02/03 we had a commitment with our lender for the construction note and a mortgage if the appraised amount was what we promised it would be when we started the construction. And it was so we did not have a problem. Our constrcution note came from one source but our mortgage came from another and both sources knew how and what we had planned. So far everything is working okay. Good luck to you.

Lizza · #11 08/20/10, 06:09 PM

Try Farm Credit about getting a new mortgage on your construction. I *think* this is the right link. http://www.farmcreditnetwork.com/

danielsumner · #12 08/20/10, 06:29 PM

Chewie, not trying to be nosey or anything, but what rate% is the bank offering. Are they asking for points, or are they going to convert the construction loan to a fixed rate mortgage. Many times a higher interest rate can work to your advantage. For example, less points and or fees. Same way with a 15 year/ 30 year loan. Make a couple hundred extra to the principle each month and the 30 year loans becomes a 15 or even 10 year loan, thus making your mortgage cheaper to pay off. The first years of a mortgage are all interest anyway, start shaving it down in the beginning and you save big. Banks don't really want you paying extra, they want the interest payment. Sometimes it pays to get the high rate and after a couple of years refinance. I learned many years ago and after several properties, not just to look at the interest rate, but the loan and it components as a whole.

Daniel

Dutchie · #13 08/20/10, 06:35 PM

Daniel gave you some sound advise.

I do a lot of appraisals for Quicken Loans. I have no idea what kind of programs/terms they have but give them a try. They do a lot of rural loans with acreage.

fishhead · #14 08/20/10, 06:40 PM

Get an appraisal, then get a list of lenders and start calling. Call every one and ask them what the interest rate is on a 30 year FIXED RATE mortgage AND what their entire closing costs will be. Make sure there are no penalties for early payment. That way you can pay it off early and save a lot of interest.

Call every single lender so you don't miss anyone.

There are free mortgage calculators on the web to determine your payment.

Minelson · #15 08/20/10, 07:00 PM

No advice but I just wanted to say I'm so sorry you are going through this! I'm sure you will get it all figured out. Hugs to you....

CrashTestRanch · #16 08/20/10, 07:21 PM

trying to decipher your OP

so you had a house built through an interest only construction loan? If so, this explains why they are not playing nice ...

Callieslamb · #17 08/20/10, 07:36 PM

I don't think we have ever had a home loan through the bank we bank with. We just go shopping and find the best deal. Don't be concerned about looking. shopping for a better deal is the American way.

tiogacounty · #18 08/20/10, 08:24 PM

A lot of interesting advice, but I disagree with most of it. I build new homes for a living, so I have a bit of a dog in the fight when it comes to getting banks to produce for my customers. The bottom line is that relationships are meaningless with MOST banks. If you are dealing with the real decision maker at a very local lender, AND they are holding their own loans in their portfolio, your relationship, standing in the community and other factors come into play. If not, they are selling your loan, with the full faith and credit of our bankrupt federal government as a back-up creditor. They couldn't care if you have green skin and a tail, as long as you are purchasing a desirable property that you can afford, have good credit score and income documentation. I would stick with BANKS only, in the boom a lot of brokers were real scum, and I still avoid them entirely. It's simply too hard to separate the lizards and liars from the good ones with that industry. Banks can no longer afford to keep dishonest loan originators in house, so it's a bit safer, IMHO. Next, you need to shop aggresively and cast a wide net. Talk to anybody who will loan in your area, not just the local banks, or credit unions. Get pre-approved with a few, then get them to clearly list all costs involved with their offer. Last forget about presenting anybody with your appraisal. Appraisals are a really touchy issue of late, and the bank needs to have a very hands off approach to this issue. I live in an area with a bad reputation for shady lending and appraisal practices. Currently, it's nothing for a bank to send an appraiser in from out of state. This person has no knowledge of the area, and no influence from the local real estate or lending communities. The appraisals tend to be lower than a local might produce, but that's what the bank wants, and needs to protect their interest. Bottom line, is that you might want an appraisal for your own needs, but your bank will charge you for another one, and you may be shocked by the difference (if you get to see it at all). You also need to do a free on-line amortization chart on the amount you have borrowed and are planning to refinancing. Another poster is correct, both loans will not provide much in the way of building equity for the next several years. So, there may be no harm in staying put in your current situation, and CALMLY research your next move. Good luck.

WhiteWillow · #19 08/20/10, 08:33 PM

I don't have any advice but I am hoping you have the time to answer a couple of questions. I don't exactly understand your original posting. You got a construction loan and built the house, right? But you don't have a home loan so you can't live in the house? What happens if you can't get a home loan? Who owns the house? I don't understand why a bank would want to give you money to build a house but then look no further.

tiogacounty · #20 08/20/10, 08:48 PM

Quote:

Originally Posted by WhiteWillow

I don't have any advice but I am hoping you have the time to answer a couple of questions. I don't exactly understand your original posting. You got a construction loan and built the house, right? But you don't have a home loan so you can't live in the house? What happens if you can't get a home loan? Who owns the house? I don't understand why a bank would want to give you money to build a house but then look no further.

The construction loan is interest only. The customer can move in after all the local inspectors are happy, and sign off. This bank believes that it can't lose. They collect interest only, and are offering a less than fair deal to the owner to "roll the note over" into a fixed rate mortgage. In these parts a more typical deal is a single closing construction loan/mortgage, with pre-determined terms. The house get completed, then it's inspected by the bank. The loan converts to a permanent mortgage and it starts to build equity. The fees are a few thousand higher than a normal loan to start. But, the bank assumes the risk of the construction loan, and pays an inspector to review the various stages of construction, so the costs are justified. That said, residential construction loans are the riskiest segment of the industry lately. I just read that nationally, 23% of all outstanding residential construction loans are in default, and are over 90 days late. WOW!!!!!