mortgage question

[Brett Hartwig]

for the financial gurus out there-



We are done building our house and are moved in. Several months ago, before we broke ground, an assessor valued the project at $262, 000 after looking at the blue prints, interior options, etc. We were pre-approved for a loan of 260,000 from the bank and built accordingly, staying near that 260,000 mark at the end of the project. Now the appraisor has come through and her number is 250,000. So apparently we have to come up with the $10,000 difference. What kind of ******** is that? Is that normally how this works? Why did the bank give us the blessing to use 260,000 of their money and then turn around later and say the house is worth 250,000. I don't get it! Anything we are not thinking of or should question the bank on?

 

[Paul Maurer 2]

Has the bank told you you need the $10k? If you have a preapproval in writing, they should stick to it. I would play hardball here and challenge the appraiser over the difference if necessary.

 

[EddieS'04]

If it was a state or county apraiser. Sometimes that happens. It did for me. It helps on taxes and also when I bought my ex out in the divorce.

 

[gary s]

pre-approval and appraisals are two different things.

a bank gives you a pre-approval for an amount they feel you will be able to satisfy.

an appraisal is what the current fair market value estimate is of your home.

it appears at the time of your pre-approval, the market has declined and yes you are responisible for the 10K.

you were prepared to use the full $260K, so i wouldn't sweat it as it sounds like you will be spending many years in your home and it most likey will appreciate over time.

not pleasant, but reality in this unstable housing market.

good luck

 

[Brett Hartwig]

gary, sure we plan on spending the rest of our lives in this house, however, I currently cannot **** 10K. anybody want to loan it to me? Can you foreclose on a house after being in it a month? VERY FRUSTRATED! :angry:

 

[gary s]

"Can you foreclose on a house after being in it a month? VERY FRUSTRATED!"



no, you are not even near FC.

see if you can work w/ the lender. they may based on an good/excellent credit history.



good luck

 

[Kevin Palmer]

It is this type of reason that you should never (generally speaking) borrow more than 85% of what you were pre-approved for.



This allows for the what ifs and the Oh $h!ts as you build. Further, it allows you to be able to buy curtains, toilet paper holders, window treatments ect ect ect. Which can EASILY get to the 10 grand mark on its own.



That said, you are now in a place that is very difficult. You can ask he bank to look things over again and see if they can increase your pre-approval figure. Or, you can often cut a deal to pay a higher interest rate for "X" amount of years which will build up the 10 grand you in need. Yes, it will cost you over time, but it is an answer. The rate is normally 3 percent higher than what you can normally get the loan for and then it drops if you have it in your contract. If not within the contract, you can often refinance, but that can be risky as it is a wait and see kind of thing as you never know where the rates will be in 10 years or so.



Building a home is truly a great thing in life to do, but it comes with MANY hidden costs along the way.



As an example, if you were to foreclose as you mentioned (I know you didn't mean it, just using it as an example), I would be able to buy YOUR home for less than you built it for due to the market change just from when you started to build vs. todays values. Seems like it is not a very fair system, but it is what it is.

 

[Bill Barber]

If the House was worth 265K 6 mos ago, is no surprise it is worth 250 today, thats the way the market is these days.

 

[Thomas Rogers]

Sounds like the loan amount was too dangerously close to the total value of the home. Never a good idea, especially in these times in the real estate market.



TJR

 

[Jim parnell]

you could possibly offer any other assets you own (free & clear/no debt) such as a car(s), etc, if the bank won't work with you. Or possibly borrow from family, take a distribution from retirement, or borrow from your retirement, you in essence loan yourself the money and pay yourself back with interest. Just some options, but it sounds like costs overruns happened to you just like to the majority of people building.

 

[Richard L]

I agree with the other who said that the original apraisal was inflated and that led to a higher loan value. That does not mean your house is not worth the original apraised amount, but the bank may now want to finance that much, and would prefer that you put down some additional money.



I would seek and explaination from the bank/apraiser. Did the real estate values drop in the area where you built the new house, or perhaps you lowered the value by changing to cheaper lower quality fixtures and fittings. Often time the choices you make on plumbing fixutures, light fixtures, flooring, cabinetry, may not fit in with the house or neighborhood and can reduce the actual value of the house.



...Rich