Conventional vs. nonconventional

Discussion in 'Homesteading Questions' started by Joanna, Jan 14, 2005.

  1. Joanna

    Joanna Guest

    I'm new here, but have already learned so much just reading over posts. Hopefully I can get a little advice on a purchase we're considering.

    My partner & I moved to a town we absolutely love. We have decent jobs (one with the state) and there is a huge buy local/organic farm movement here. The biggest problem is housing prices. The area has been on a few top ten lists and costs are outreageous in town. We can qualify for $180K conventional loan, but all that buys us is a tiny beater house in a crummy neighborhood, with a smallish lot.

    We looked about 10 minutes out of town and found an older (1969) mobile/manufactured home on 1.18 acres for $124K. It's on a road the county plows nicely, near an express bus route to town. Near a salmon river, but not on the FEMA flood map, 2 miles from an organic subscription farm.

    The problem is that we can't get conventional financing due to the age of the building and they wont finance just the land at that price. I was told over the phone today that nonconforming loan rates are "in the 8's". Which means over 8% I'm guessing. If we go conventional, we'd get the best bank rate of 5.087. But I'm thinking we won't likely find a conventional house anywhere near town or on more than a 1/2 acre for under 180K. I've been looking for a while now. If this place seems in decent shape (after inspection) would it be a good idea to grab it at higher interest now, and try to build something we could refinance later?

    Thanks for taking the time to read through my rambling...
  2. RMShepp

    RMShepp Active Member

    Nov 6, 2004
    You didn't say how much you have to finance, but you might try finding out how much the bank will finance it for, conventionally, and then ask the seller to take a second mortgage for the balance. Good luck!

  3. Hoop

    Hoop Well-Known Member

    Jan 1, 2003
    Northern Wisconsin
    Just my opinion.

    Paying $124,000 for a 1969 trailer is complete insanity. The fact that it has its own lot matters little.

    KEEP LOOKING. Look further from town.
  4. sidepasser

    sidepasser Well-Known Member

    May 10, 2002
    GA & Ala

    sounds like you live in a very expensive area!! I'd look a lot further from town, what is your driving tolerance? If you pay a high interest rate for a mobile home, you will lose money over the long haul as it is steadily depreciating all the time. What you will really be buying is the lot it sits on and then add a couple of thousand on top of that for the trailer (i'm in the south and yep, that's what we call 'em).

    I'd see if you couldn't find something further out, cheaper.

  5. desdawg

    desdawg Well-Known Member

    Jul 18, 2004
    I have a couple of older mobile homes on acreage that I just advertised at $54,900 in the paper. There is very little available in the way of financing so I will have to be the lender when I find buyers. If that seller isn't willing to carry the note you probably need to just keep looking for a MOTIVATED seller. Typically anyone with that much cash will use it to leverage a bigger, better place. You can always write an offer and see what the seller does with it. Conversation is nice but sometimes sellers will do something different when they get a real offer with earnest money in their hands. If that price is comparable to the market in your area someone will have a real need to sell sooner or later. Look for the magic letters OWC (owner will carry)in the ads. Sounds real pricey.
  6. MorrisonCorner

    MorrisonCorner Mansfield, VT for 200 yrs

    Jul 27, 2004
    I don't know where you folks are, but I had the perfectly ghastly thought when I saw that post "gee.. what a bargain." Welcome (she said dryly) to Vermont. Where you're choices go along these lines:

    Few good employers. There are plenty of JOBS... not many good employers. Not ones who provide affordable heath care, none that provide pensions (that I know of) although some do a 401k thing, a little vacation time, a little flexibility... we call these employers "destination employers" because people will commute 1 hour each way to hold these jobs. Now, in VT this means you're about 40 miles away from your job, give or take... which during half the year is probably not an issue. During the other half the driving is hazardous and ugly.

    To hold down a job you drive to you have to (duh) drive to it. This means you and your partner/spouse need two reliable vehicles. In our case, two reliable and one completely unreliable backup. This costs some serious money. Serious enough so if I were looking at property right now I'd look long and carefully at the piece closer to the work/town center rather than further away. What you might "save" on your housing by buying further out you will spend on transportation costs (plus travel time) many times over.

    You might also want to consider resale... is the place in the boonies going to appreciate as quickly as a good sized lot that the town is reaching out toward?

    Consider refurb or remodel... or even rebuild... could you enhance the value of the current house for little or no cash?

    Long commutes, especially if you absolutely, positively, have to be there to keep your job, are highly overrated. I don't dare own a beater... if the thing breaks down, I'm dead in the water. So I'm forced into owning decent cars. Which cost money. We own a truck so we can haul supplies, but can't afford to get yet another vehicle so he can commute... the gas costs alone give me gray hair.

    So I would, seriously, consider looking closer to town. I'd look for a large lot with an "undesireable house" on it... something old and faded that doesn't show well, and then I'd be ready to make a fairly low bid on it to see if they'd bite.
  7. Whatcom Webfoot

    Whatcom Webfoot New Member

    Jan 15, 2005
    Well the trailer is a dump. The lot itself is beautifully situated.

    I just moved here from the country. I sold two houses and 15 acres of land on a creek to move to this particular area. Yes it's expensive, but it's worth it to live near open-minded people and a fertile climate. I still have another 20 acres for sale over there. Land and houses are really cheap in NE WA, but I got sick of the attitudes of the people there. And the lack of anything more than subsistence lifestyle. I guess I'd rather try to work out a deal on a scrap trailer on an acre of land where I'm at, than own 35 acres of creek bottom, timber and pasture with house and outbuildings back in Colville.

    I'm just about ready to pay a realtor to start the footwork for me. Hopefully they can find a way to finance the lot and some kind of contruction in one package. I don't have any clue if there are those kind of loans, at least not in my price range. I've been looking at some really cute kit houses in case I end up with a lot instead of a house, but even decent lots are hard to find. Unless I want to live in a floodplain, volcano debris path, or possible tsunami danger zone. I'd rather avoid that, though 8 acres with bay & mountain view for 50K is a nice price :p

    I guess I just need to put my best bargain hunting hat on and keep sniffing.

  8. Maura

    Maura Well-Known Member Supporter

    Jun 6, 2004
    Michigan's thumb
    I have no idea of the market values in your area, but... you are paying for the land, the well, and the septic. Go to the assessor's office and find out what that type of land and size is selling for, and the value of the well and septic. The actual price to put in a well and/or septic may be much higer than the value shown on the card, but you can contact companies who do that sort of work to find out what you would pay for new. It is possible that the well and septic make the land a good deal. Also, contact the permit department to see if they will let you build a house while there is still a mobile home on it. Our county would not let us do that, so we spent our first summer out here in a tent.