turned down for mortgage because I heat with wood

Discussion in 'Homesteading Questions' started by moomaine, Jul 14, 2004.

  1. moomaine

    moomaine Member

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    Just heard from the bank that I've been turned down for a refinance because my primary heat source is [ heaven forbid ]a woodstove. I don't want to mention any specific bank [ Damariscotta Bank up here in Maine] but, I am quite angry and I'd like any thoughts or advice you might have. Our credit is clean and we live within our means. Has anyone else had this happen to them? By the way, the appraiser the bank sent out told me he could get me a good deal on a furnace. Aint that a kicker? Len
     
  2. bearkiller

    bearkiller Well-Known Member

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    Well, young man,

    Don't feel too bad, they turned me down because my house didn't have a foundation! LOL

    Their calls are dependant upon what they can easily sell when you can't pay your mortgage any more and they get to make more money renting your property to some other glutton for punishment. Count your blessings and move on.

    bearkiller
     

  3. sisterpine

    sisterpine Goshen Farm Supporter

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    Greetings from Montana! Are you kidding! All the folks I know that live at all alternatively have been turned down for mortgages for one reason or another relating to the house, house location, remote house, wood heat, solar panels, gray water system, snowy roads etc etc. I have been working on locating a mortage since March 1st. And am still looking for one, now just cause I am so angry at the idiots who preach, green planet and then wont mortgage it!. Try local credit unions and farm and ranch lenders at least that is what I have been told. I sent out a bunch of emails with the details of my housing situation and did get some replys so you might try that. I may have a line on a mortgage now if the appraiser will change the remote to rural and the less than 25 percent built up to over 25 percent built up. Will have to wait and see. Please post if you find a lender! I will also!
     
  4. Donovan K

    Donovan K Well-Known Member

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    Don't feel singled out. When looking at a variety of properties in florida it was made clear to me that I couldnt get any mortgage on a home with a wood burning stove, even a concrete block house.

    I have also seen it very difficult for people to get insurance on a home with wood heat. Perhaps it is more common in Maine to use wood that here in florida.. or in the Midwest where I lived before. Back in the 1980's when everyone was buying woodburning stoves for their homes (it was very trendy) everyone always lied to their insurance company about having one so they wouldnt see their rates increase.

    Donovan
     
  5. GRHE

    GRHE Mountain Ogre

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    We got lucky; our house has an installed set of floorboard heaters that don't get used except when my parents visit (they insist the wood burner is frigid even once its up to 85). I did not even know if the electric hogs worked when we bought the place, just told the mortgage company they were the heat source. The "foundation" is fake, just a rim of cement and cinder blocks, but both the mortgage agent and insurance man wanted their commissions so they ignored the fact that it was obviously post and pillar construction with a facade foundation. Yeah, like a busted up 3" slab of concrete is going to keep termites out. Good thing my wife was the one that worked with them, my attitude would surely have gotten us turned down on multiple counts. Any way you can put up fake ductwork and tract down a junked furnace? Maybe they won't make you prove it works since it is summer. Do you even need a heat source to qualify in Florida, or are they telling you your disqualified just for having the wood burner even if there is another heat source? I hate to do anything except be 100% honest, but lord when the morons start these insipid tactics....
     
  6. Mutti

    Mutti Well-Known Member Supporter

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    Don't know where you live but try smaller banks out in the country who are more likely to mortage a house with wood heat. When we bought our 100+ year old farmhouse it had a chimmney which we found to be cracked from a lightening strike but a local bank gave us a mortgage. They should be eager for your business if you have good credit rating. Sometimes taking a slightly higher interest rate or a ballon mortgage to prove yourself works,too. Also, the smaller independent insurance agents are more willing to work with farmers. We installed a stainless steel chimmney flue and no problems insuring the house. Now we have outdoor hot water heat wood furnace which is the berries...free hot water,too. Seems like the insurnace companies want to take NO risks anymore. We would never claim on our policy unless our house burned down or blew away....had a huge tree come down this spring in a straight line wind storm which barely missed our house--would have taken out half the house and possibly killed us sleeping upstairs but the good Lord was watching over us. You can't really insure for everything anyhow; not at todays rates. :) DEE
     
  7. fin29

    fin29 Well-Known Member

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    :haha: It doesn't get much smaller than Damariscotta.

    Personally, I would go for a larger bank who do so many mortgages that they wouldn't think to ask a question like that. Try Fleet; we had an easy time with them on our last house (in Gardiner), and we had a woodstove, though it wasn't our primary heat source.

    The other thing you can do is go to Home Depot, buy 5 or 6 $40 electric baseboards and plug them in for the appraisal. Then your primary heat source is electric. When the appraisal's done, pack them back up and take them back. Though, I wouldn't know personally if that tactic would work or anything... ;)
     
  8. Hoop

    Hoop Well-Known Member

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    This is the first I've heard of being turned down for financing because of having wood heat. Try other banks. Lots of other banks if need be.

    I recall the episode of a guy that wanted to open a Raquetball Club in the late 70's. He was turned down by 36 different banks. Bank #37 gave him the loan. He is now a millionaire.


    Several people have mentioned that insurance companies are getting downright antagonistic towards people that heat their homes with wood. I agree. I know the reason why. Insurance companies have actuary tables at there beck & call. The long & short of it is this, homes heated with wood burn to the ground on a far greater frequency than other homes. Insurance companies exist strictly to make a profit. Maximizing their profit means reducing their risk.
    In addition, wood heat requires maintenance. Your insurance agent isn't going to inspect your woodpile and make sure you're only burning seasoned wood. They also aren't going to inspect your chimney to see if its been periodically cleaned.
    Insurance companies know these things.....and fewer companies are willing to underwrite policies for inside the house wood stoves.

    IMHO, insurance companies will get even more bellicose towards inside the house wood stoves. The outside wood burners are the future of wood heat.
     
  9. SHELBY

    SHELBY Well-Known Member

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    oh wait I got a good one.. We got turned down because we have 25 acres. Told the mortgage company that and they ran like the wind... :eek:
    Had another company tell me that if I made sure the animals were put away when the appraiser came out then I would have a better chance :rolleyes:
     
  10. Ken Scharabok

    Ken Scharabok In Remembrance

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    You said you were refinancing so I'll make the assumption you were trying to perhaps get some equity out of the loan and get a lower interest rate. Assuming this is the bank with your current mortgage, there isn't a real incentive for them to refinance. It lowers their income so to speak. Other places which offer refinancing may be in a situation where they have more applications than they can fund, meaning they can be more selective.

    I suspect a large part of the bank's concern is a fire causing significant damage and they are then stuck with a property which may be unprofitable for them. See if you can find fire insurance for more than the cost of replacing the entire structure and then approach them about including a policy (which cannot be cancelled without their consent) as a condition of the loan to where they are the beneficiary of the insurance. Basically like a bank requiring you to purchase life insurance with their being the prime beneficiary up to the value of the outstanding loan.

    I have State Farm and they wouldn't insure me if I used a portable kerocene heater.

    The Hardys (who hosted the July 4th event) have an outdoor wood-burning heater. I was really impressed with it. Since he has a small sawmill, basically their firewood is a by-product of it. Still, everything was kept outdoors which, they said, made for a much cleaner home.

    Ken Scharabok
     
  11. homebirtha

    homebirtha Well-Known Member

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    We're in the middle of an appraisal on a place we're buying and I'm waiting to see what they come up with. It's over 10 acres, so that's bad; it's heated primarily with wood, that's bad; it's small, that's bad. :no:

    My suggestion would be to try another bank, and go get a few electric baseboard heaters before they come for the appraisal. Heck, you probably wouldn't even have to plug them in, just have them there and tell them your primary heat source is electric. Hey, we have one here that I tried to sell at our yard sale last week for $10. Too bad you're not closer to Maryland.

    Farm Credit might be more reasonable too. They have much less stringent guidelines because they can keep some of their loans in house if they don't conform to federal guidelines. But their rates are usually higher. Good luck.
     
  12. Tracy Rimmer

    Tracy Rimmer CF, Classroom & Books Mod Supporter

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    My kneejerk reaction is to install a couple of baseboard heaters and tell them the wood stove is never used -- it's just for show.

    Have you thought of going through a mortgage broker? If you can negotiate your own mortgage, it's generally better for you, but if you're having trouble, it might be worth it.
     
  13. jassytoo

    jassytoo Well-Known Member Supporter

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    We heated with wood for over 20 years but also had baseboard heaters. Never used them but they were cheap and got us insurance. Wood stove was listed as backup heat. We did make sure the woodstove was up to code though and had it inspected. That helped a lot with getting insurance. I've never heard of getting turned down for insurance because of having over 10 acres. Why is that? Our new place has 105!
     
  14. big rockpile

    big rockpile If I need a Shelter

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    One time the Insurance People can out to look over this house I had,wife told them to come back when I was home.Next thing I know I'm getting a letter saying that they were cancelling my Insurance :eek: because I heated with wood,even though they didn't know if I heated with Wood. :confused:

    big rockpile
     
  15. Smelt

    Smelt Active Member

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    We have a woodstove in a 150 yr old cape. Bad wiring, foundation, siding etc. 16 acres, animals...and a BIG Akita. Insurance is from State Farm-no problems (knock on wood). Go to Kennebec Savings Bank...good people...we bank at the Winthrop branch...local bank, old fashioned service, don't sell their mortagages, no points, and the $ stay in state.

    Just my brief 3 cents. :)
     
  16. Ken Scharabok

    Ken Scharabok In Remembrance

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    Big Rockpile:

    The three cords of wood you had stacked by the side of the yard may have been a sign to them.

    Ken Scharabok
     
  17. Surveyorwill

    Surveyorwill Active Member

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    When we bought our place, a year ago the wood stove was a factor to both the lender & Insurance. The seller had to put in electric baseboards. Rural location was another issue, the first lender dropped us the day we were going to sign, :eek: mortgage Company scrambled and were able to find a lender with a better rate than the first one, we lucked out. :p The appraiser did fudge and said we were suburban and not rural, and that the nearest city center was 8 miles. Yea, our city of 2100 people, three bars, two hotels, seven restaurants, two stores and a few other shops, big city. :haha:

    We couldn’t find insurance because the woodstove was still in the house so we ended up going with the local guy; his underwriter dropped us after a year because with the wood stove and:

    1) 5.5 miles from fire station, that’s the one the inspector drove past, the one we would use is only 2 miles from the house, past our road in the other direction.

    2) No fire hydrant within 1000 feet of the home, yes but there is a Fire Marshal approved water storage tank within 500 feet of the home.

    Let’s just face it, we all live outside the norm (by their standards) and they, either just don’t know what to do with us, or they think by inflicting enough restrictions they will be able to keep more people in the cities, where they have more control (so they think). ;)
     
  18. Jan in CO

    Jan in CO Well-Known Member Supporter

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    You just never know. My brother and his wife bought their home last year, and then found out it had formerly been a turkey brooder house many years ago. Had cracks beside the fireplace you could throw a cat through, and an EXTENSION CORD running from one bedroom, across the ceiling and to another small room as that room's power source! Big fat orange one, mind you. Neither the appraiser or the inspector blinked an eye. They got their loan and insurance, so you ought to keep trying. We have a wood stove, too, although there is a propane furnace in the house. We were asked if the stove had been inspected, and as I have no proof it had been, I just said I didn't know, and didn't want to tear it out and have a hole to patch in the roof. No problem, here's your insurance. Hope you find a lender and insurance company. Jan in Co
     
  19. homebirtha

    homebirtha Well-Known Member

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    Regular lenders generally won't write mortgages for anything over 10 acres. It's based on the federal guidelines and if they ever want to sell the note, they have to follow the guidelines. Anything over 10 acres technically has to be a farm loan, although if it's not much over, they will try to fudge it to get the business.

     
  20. Blu3duk

    Blu3duk Well-Known Member

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    Had an idiot appraiser out last fall, he wouldnt take a picture of the barn or chicken coop, that way they ere not there [and were not counted as an asset either] so the folks who MIGHT purchase a mortgage in the east would not get scared off cause it was once a farm, now only 5 acres of the a subdivision.... foudation is well part there, part pier block, has root celler with dirt floor/ part concrete so it stretches to a concrete floor in basement..... but i have electric heaters in the wall, that are never used except the bathroom in the winter so it gets overlooked that big ole woodstove in the living room.

    you will find a mortgag company, and probably pay a higher interest rate because of a few things that are "seen" as drawbacks..... it only took us 8 months to get one a couple years ago....9.9% and that was the reasoning behind the new appraiser..... who couldnt come up with a figure that was needed...... but he could sell the house for us for more than the appraisal price if we wanted but could get the appraisal up high enough...... so at least i did not have to pay him $00 to appraise the house..... and of course we are stuck paying nearly 10% on a mortgage for awhile..... or drop back 40 and punt.