Why in the heck is it that people who live off grid in rural america are blackballed from getting a simple home mortgage? I go to work every day, I pay my bills , my credit is fine. But I live off the grid on top of a mountain more than 25 miles from the nearest city.....so what is the big deal. I thought the issue was whether or not I would be able to repay the loan ( which i need to drill a 10,000 water well so I wont have to keep hauling water). But no, the issue is how difficult will it be for the mortgage company to sell ;your place if you default. Now I am a grown woman and already know that this is just the way life is and that life is not always fair. But all those environmentalist out there and all those folks talking about save energy, spare the planet , prepare for the worst to come....you would think there would be one mortgage company that was open minded! Thanks for letting me vent a bit.
Are you serious about drilling a 10,000 ft well? Have you gotten an estimate on the cost of such a well? The well could possibly cost more than the value of the property. Lending institutions plan on getting their mortgage money back one way or the other. One way is for you to pay it back which you feel you can do. The other is to sell the property if you default on the loan. It sounds like they don't think they can do that. You can haul a lot of water for less than the price of the well.
I was thinking the same as Uncle Will about the well. What if the well didn't get put in? It would be extremely difficult to sell such a property, and when you're in the business of loaning money, you're losing money when stuff sits and/or you sell at a loss.... Why do you need a conventional mortgage? What about borrowing against other credit you may have, like a low-interest credit card? Do you already own the property free and clear? Normally when you want to do improvements another option is a home equity line of credit, or HELOC, but your property type and location is working against you here. Do you have any relatives who can loan you the money? As you've found out, it takes green to be green. And it doesn't hurt that some of the celebs have probably found a way to make it part of a non-profit so that they can write off some or all of it on their taxes.
If you look hard enough you should be able to find private individuals who would be willing to loan the money but you will pay a much higher interest rate.
Is that a 10,000 foot well or a $10,000 dollar well? Either way if you secure a guarantee from the driller of the well that they will not stop until they hit water and at what price that guarantee holds up. I have a neighbor off grid She had to go through many hoops but did secure a regular bank loan. She had documentation out the rear and a letter from her boss that said she had worked there 8 years and had a job for as long as she wanted one. The loan officer found that hard to argue with. I believe she even got several character references from associates and her pastor. Anyway it took about 2 months but the loan came through. ---jean Oh yes her's was for a well and a wind/generator set up.
Before we went homestead hunting we got preapproved for the estimated amount we wanted to spend. The mortgage people said no problem. So we found a beautiful 13 acre property with a 30 year old doublewide and a double garage with a rotten roof. All was good till they found out the water system was a spring. Nope can't loan money for proprerties that use springs. Then the state inspected the trailer and said the porch and store room had to go, no attachments allowed to the mobile home. So in the end we self financed the deal through creative ways and bought the property. No need for those crooks anyway. By the way the spring did go dry two years later during a drought and we had to drill a well anyway!
Okay so I am a bit of an idiot when i get riled he he he. I feel much better now but still mad as a wet hen! You all were right it is 10 grand worth of water well. We do have a spring but it is slow and we are in the 6th year of a major drought here. The idea of the mortgage was to drill the well , finish the solar and combine all the other debt we developed while building our home. Not much but so many monthly payments are a drag, not to mention interest. Would also have paid off the vehicle loan. The loan brokers are now looking at credit unions and farm/ranch mortgage places but I do not hold out much hope. I suppose we will keep hauling water by snowmobile in the winter and just be grateful that we live in such a beautiful place. Unfortunately if we never can get a mortgage we will have great difficulty selling the place when we are older and more wrinkled. I would be hesitant to carry that much of a loan for some stranger with so little recourse if the default. Kind of like renting out your home and having the renter destroy it before you can toss them out. Thanks for all the input, at least I know others are also in this position.
There are a few smaller well drillers around us that are willing to drill on somewhat of a land contract type deal. They drill the well and then you pay them on monthly installments, naturally with some interest. You may want to look into that as well.
I got a small home mortgage thru Beneficial. The interest rate is a little higher than the normal home loan but it was done without an inspection. Also the interest paid can be used on your taxes. I am off-grid without a well or septic and there was no problem. The laws may vary from state to state so you might want to check on that.
"Unfortunately if we never can get a mortgage we will have great difficulty selling the place when we are older and more wrinkled. I would be hesitant to carry that much of a loan for some stranger with so little recourse if the default." Good for you for thinking about the future--so many people don't. It's nice to have that perfect place until someone gets ill, for example, and has to move closer to medical care. The credit union or bank in your immediate area is still your best bet, and not one of the big chain ones, either. You may need to switch all your accounts over, direct deposit, etc. The loan broker can only do so much, and you're still going to be paying big bucks. Family may be the best way to go, but if I were loaning it as a mortgage, I would be using the house as collateral, and only if you owned it outright. Wouldn't want to be a second mortgage holder with such a unique property. And you don't want to wait too much longer, as interest rates are going up. What other ways of increasing income do you have? Can you sell some timber? Sell some of your solar generated energy to the electric company? Rent/lease space for a cell phone tower?
Sometimes you can get a "home equity" loan based on just the tax assessed value of your property. The rate is higher than a long term mortgage and the term not as long but it might give you a way to get something. Shop around. Eric
Maybe you don't need a well. Have you thought about building a cistern and having your spring fill it along with any rain from your roof? Search the internet for sites about building your own cistern cheaply. Think outside the box.
A home equity loan is essentially a mortgage (1st or 2nd, depending on whether or not you own it outright). They use the same criteria for evaluation, and tax assessment is usually not one of them, it is market value that counts. If the property is not "marketable" in the conventional sense, even a home equity loan will be difficult, if not impossible to get. The advantage is that they are tax deductible, providing you are making enough income to deduct it against. Bear in mind, it's not so much that you can't get a loan at all, it's that the property (and your other debts) is limiting your ability to get a loan at the best (i.e. lowest) rates and most favorable terms.
Rac: You are right a mortgage is a mortgage! Any other debts we have are small and were to be paid off with the new loan. So that our only outgo would be the mortgage, we already own the house outright and it appraised well with just a speck of our land to go with it. So the credit issue is not an issue it is the uniqueness of the property. Which is actually a regular little house 1.5 stories, two bedroom one bath one office and all the other normal stuff. But solar power and a Biolet compost toilet and a gray water system that feeds the greenhouse after being filtered. I am in the process of trying everything you all have mentioned and I thank you for your knowledge and wisdom! Also we seem unable to get a house mortgage period...
I know this isn't a long term solution, but if you really need the money now, instead of going for a 'normal' 30 year mortgage, have you tried getting a 5yr one? We had a heck of a time with financing our property (40 acres of vacant land) to build our house. Got the construction loan without too much hassle, but then the bank started making demands on what the house had to have for them to consider it finished enough to refinance with a conventional mortgage. When we started construction we were told all we needed was the local building inspector to give us an occupancy permit to be considered finished. Well, when we were ready to get that, the bank sent an appraiser out who told them the house wasn't finished because the windows and door weren't trimmed on the inside of the house and we didn't have finished floors, just OSB. Long story short, we asked for the mortgage last August, and after fighting with the bank until the end of April we went and applied for a 5yr adjustable with someone else on May 1st and on June 1st we had our mortgage. The second bank did have some qualms about the amount of land, and it being used for agriculture (we have the field rented to a local farmer, plus we have chickens and horses), so we wouldn't have been able to get a 30 yr mortgage. But something about the shorter term made it more desirable to them. Now all we have to worry about is refinancing in 5 yrs, but it should be easier by then because we will have much more equity than we do at the moment.
Depending on all of your variables you may want to check in with your local/regional Rural Development office at the USDA in your area. You'd be surprised at what you might be able to find available for grants and low interest loan programs for various projects. I'm contemplating a commercial livestock venture and home that will be powered by both solar and geothermal systems and have found not only grant programs to help with equipment purchase but also programs to assist with feasibility analysis costs etc. Alternative energy sources definitely qualify. Maybe there's something hiding in there for you. Worth a phone call if nothing else.... www.rurdev.usda.gov May take a few phone calls and some digging on the net but it's all worth it if you're able to live exactly where/how you want to. Good luck
