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Old 01-24-2013, 05:23 AM
 
Location: Manassas, VA
1,559 posts, read 3,052,664 times
Reputation: 836

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My husband and I have been having a handcrafted log cabin built in Vermont. We put most of our own money into but took out a construction loan of 200k to finish it off. Well, with cost overruns it didn't finish it off but we are about 90% done and have been paying the rest of everything out of pocket. Needless to say, that won't leave us with a whole lot of $$ left over but we'll still have a little something. Anyways - my question is this: It was a local bank that gave us the construction loan. The house was appraised at that time for $540,000. Our construction loan was for $200k. We emailed the original lender yesterday and wanted to know if all appliances had to be installed, etc.. We will be taking some of the appliances from our current house and moving them into the new house which obviously won't be until AFTER we move. I have included the 'conversation' below but I don't want to continue with this lender based on the responses. We were just looking for answers (we've never done this before) and I feel like the lender was a bit rude. Would it be difficult to go to another bank to turn this into a conventional loan?

I put the conversation we had on the email with the lender yesterday.....
__________________________________________________ _______________________________
"Hi ***,



*** and I have a few questions about transferring our construction loan into a mortgage. Do you have either a guideline or provide a link to a guideline covering our situation?



Since the house is now worth 2.5 to 3 times the construction loan, will this appraisal affect the point at which we can make the transition happen?



We have such questions as:



1) Do the cabinets and kitchen appliances have to be installed? I should think this is a personal preference and would not impact the question of completion.

Obviously, we desire to start paying on a mortgage in lieu of the construction loan interest. Any help and/or suggestions will be appreciated.



Hope your holidays were good. Ours were very quiet this year.



Regards


Here was his response:




Regardless of the value, everything must be done before this goes into a conventional mortgage.

That was made quite clear at application. Done means done.

Here was our response:

****

Please provide a link to, or an in-house, check list to help us out. Aside from the value, we had other questions as well.

Regards


Here was his response:

I guess I am the link.

What are your other questions?


__________________________________________________ ___________________________________
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Old 01-24-2013, 10:58 AM
 
4,543 posts, read 11,551,865 times
Reputation: 3063
His response was pretty short (could have been put in a much nicer fashion), but it is correct. The home has to be done. This includes kitchen cabinets, appliances, all fixtures installed, all trim, floor coverings and finishing work done (etc.). If the lender has to take the home back they want/need it to be a completed home. It is hard enough to sell a foreclorsure let alone a 1/2 finished foreclosure.
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Old 01-24-2013, 11:35 AM
 
Location: Manassas, VA
1,559 posts, read 3,052,664 times
Reputation: 836
I understand completely but think he could have definitely 'explained'. I mean - does the washer and dryer have to be installed? I have seen homes sold and gone into a conventional mortgage with no washer/dryer, fridge, etc. We were just looking for clarification. We've never done this before.
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Old 01-24-2013, 12:07 PM
 
4,543 posts, read 11,551,865 times
Reputation: 3063
Ya, he was WAY too short. No you don't need the washer & Dryer and could probably get by without the fridge too.
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Old 01-24-2013, 12:14 PM
 
4,304 posts, read 11,129,515 times
Reputation: 2456
I did construction loans for years and what is required to convert the loan is a certificate of occupancy permit from the county. A fridge or washer/dryer is not typically required to secure permit. A range/stove/oven is required. You will need your CO and lien releases from builder to confirm all sub/suppliers have been paid.

Reggie

Last edited by Grainraiser; 01-24-2013 at 12:47 PM..
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Old 01-24-2013, 01:41 PM
 
Location: Manassas, VA
1,559 posts, read 3,052,664 times
Reputation: 836
Thanks guys. Where we are building, no Certificate of Occupancy is required - seriously ! It isn't a big deal for us to throw appliances in there, it was just a question. It's not like we don't have to get a new stove, dishwasher, etc. anyways.... Thanks for the encouragement! We've been at this for a year and a half now and are in the homestretch! Cabinets will get ordered next weekend!
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