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Sometimes you can finance with a local bank directly. It’s called a bank note. They keep the loan in house but it works like an adjustable rate mortgage usually. If you want you can eventually get a conventional mortgage and pay it off in full.
I fear if the OP walked into a bank, asking for a bank note, they would not understand what you were seeking.
What you want to do is find a lender that offers portfolio lending on mortgage loans. This would be considered a conventionsl loan. (A conventional loan is any loan that is not insured by the government, like FHA, VA or USDA). Portfolio lendering does not mean no rules or guidelines. It simply means the lender does not sell any interest in the loan to any third parties. Large banks and most credit unions are portfolio lenders. The banks, though, have rigid criteria.
In any event, a 2nd independent appraisal is definitely called for, for your peace of mind, and the lender's. Additional more down is not the answer on this one.
In any event, a 2nd independent appraisal is definitely called for, for your peace of mind, and the lender's. Additional more down is not the answer on this one.
Thank you for your reply.
The house I am interested in purchasing would be a vacation home and I want to make sure I am not buying something that will be too problematic to sell a few years down the road if life ends up swinging that way. So if I was denied a conventional fixed rate loan from a local bank I would definitely see that as a sign to walk away.
Now that the appraisal is done, would it be appropriate to contact the appraiser from the big bank loan that was denied to see if she has any insight?
Your problem. You have a home, the bank which is out of the area, finds not meet their knowledge of that type of construction. This is why a lot of people like yourself, find it impossible to finance a home with an out of area bank.
The local banks understand the local market, and have no problem getting such a home financed.
The house I am interested in purchasing would be a vacation home and I want to make sure I am not buying something that will be too problematic to sell a few years down the road if life ends up swinging that way. So if I was denied a conventional fixed rate loan from a local bank I would definitely see that as a sign to walk away.
Now that the appraisal is done, would it be appropriate to contact the appraiser from the big bank loan that was denied to see if she has any insight?
The appraiser cannot discuss the appraisal or the results with you.
Perhaps, making it your primary residence on paper) would help. I thought USDA was the way to go for rural properties. Oh, and what is the land worth? Banks don't want to loan on a big piece of land with a modest house.
Perhaps, making it your primary residence on paper) would help. I thought USDA was the way to go for rural properties. Oh, and what is the land worth? Banks don't want to loan on a big piece of land with a modest house.
Calling it a primary residence won't help--unless you think that mortgage fraud is really the way to go.
I spoke so far with one of the four local banks. They have no application fee, I would only pay for the second appraisal. Given that I've already paid for inspections and so on out of pocket this would be a good next step. And the second appraisal will provide the peace of mind about value that I need
First time home buyer. I applied for a mortgage at one of the big banks with whom I have done banking with for 15+ years. I'm in a good position financially, excellent credit, no debt and able to put down a substantial down payment on a secondary home (I live in a big city and rent my primary residence.) The purchase price is $250,000 and I asked the bank for a $100,000 mortgage. The house was appraised at came back at $250,000 - the appraisal seemed thorough and the appraiser was familiar with the area. Given that it's a rural area with not a huge amount of sales the comps seemed well chosen.
To get to the point, the bank denied the loan in underwriting. At first they asked if I could provide a list of 3 more comps but then called back the next day to deny the loan. Their explanation was vague, just that the property was 'too unique' to lend on. I'm really caught off guard given that the LTV ratio is low. The house is a very solidly built post & beam (i.e. pole barn) built by reputable builders in the area (they have been in business since about the time the house was built in the mid 80's).
I know I can (and maybe should) approach a local bank to re-apply but my confidence in the property value is a bit rattled. And if it is this difficult for me to get a loan even when offering to put a substantial amount of money down with a good financial rating then that would seem to put me in a difficult position if I need to resell the property down the line.
Any advice on next steps to regain confidence about the whole project?
To me it seems crazy that a bank would not lend you $100K on a property that was appraised at $250K. They would have to think the appraisal was off more than $150K for this to happen and that the appraiser who is independent would be willing to risk their reputation over something so absurd. Did you ask the bank that in plain english, is it possible they think you need $250K? My advice it to keep moving forward and if that bank does not want your business, find another and then when you close take all your accounts from that bank and warn others with a bad review for them.
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