How do I pay off a Lienholder to get a Home Improvement Loan? (Portland: mortgage) - Oregon (OR) - City-Data Forum

Wilmath · 06-24-2019, 08:03 PM

I am planning on building my own home. While this will be the first one I have built myself, I am hardly without experience. I have worked many of the trades for professionals and am competent in in several others. Of course there are some parts that I am going to pass off to contractors but most of build will be done by myself and a helper.

However, it is the financing of this grand enterprise that I am most concerned about. I have good credit but I don't think it will pass muster for a construction loan. Also, to get a lot, lenders would like 20% down. I would like to make a down payment of no more than $5000 which is 10% in the Eugene Oregon area for most lots.

I want to build most of the house, enough to get a certificate of occupancy, and then at that point get a home improvement loan to finish it off. I am thinking that at that point there would be more collateral and more negotiable collateral so a loan would be much easier to get.

There are lots available in which the owner will carry the note and I think I can easily make a deal with one of them. But I am wondering how my Big Plan will work when I get that certificate of occupancy?
Do I approach my lot seller and ask him to be part of the loan in which he would get paid off. Or do I explain to the lender and have them pay off the lot before I get anything?

Any ideas?
Thanks
Rick

texasdiver · 06-24-2019, 09:45 PM

I think in your shoes I'd sit down with a couple different lenders and go over your various scenarios and ask for advice. I'm sure if you look you can find someone who specializes in this sort of thing and will give you much better information than you'll get here. Maybe the manager of a small local bank who does these sorts of loans.

Izzie1213 · 06-24-2019, 10:11 PM

Problem is banks don't like to lend unsecured (collateral) loans to a guy who wants to build their own house. My BIL built his own home but with excellent credit and a good amount saved up lenders are hesitant unless your a builder. My BIL was lucky enough to have his parents and my parents front the money to build then got a loan on house after it was completed and paid back his parents and mine.

The only thing he contracted out, foundation (full basement) rafters and shingles, drywall.

He did have lot paid for in full and asked if the lenders would take that as collateral, nope, that they had no interest in. It is in very desirable area on a quite dead end street.

Larry Caldwell · 06-24-2019, 11:18 PM

There is no such thing as a certificate of occupancy for a dwelling, but you will have to pass plumbing, mechanical and electrical inspections or it will be tagged as a dangerous building. Cities are sticky about things like water and sewer.

Johnny Z · 06-25-2019, 07:12 AM

Todays world is different than when I built my house. First I secured the land, paid it off, before building, vacant land was cheap back then and building codes and restrictions were lax. Then I built my first addition and kept building, no Banks, pay as you go. Not sure you could do it that way today, especially around Eugene or any other city. Every week I went to the lumber yards and picked up materials. I did have a small line of credit with one of the lumber yards and got some special deals on units which saved me allot of money. In fact they never charged me interest because I was a good customer and paid them off quickly. Funny how some guys go to the Bar and blow their pay check, I went to the lumber yard and did the same.

Izzie1213 · 06-25-2019, 08:14 AM

I know my BIL had to get a permit for building the house and it was only good for so long, maybe one year. It is a good sized somewhat complicated house so took longer than what a more simple rambler style home. He and my sister both worked full time so they were right up against the one year on the permit and get COO. There were a number of weekends a bunch if friends, really mostly family, would be asked to help do a bunch of basic work. Put seal and water proofing on outside basement walls. Place sod when it was delivered. Pound some nails when where needed. Paint drywall. Clean before finishing done, stain woodwork etc. He also had a plumber and electrician uncle's.

oregonwoodsmoke · 06-25-2019, 09:04 AM

The chances that you can find anyone to carry paper on a building lot for only 10% down and who will subjugate their note are just about nil. So none of the rest of it is going to end up being a problem for you,

One of the banks with "Washington" in its name will do an owner builder mortgage. I can't remember which one, but there aren't that many so it wouldn't take you long to call around and find which one.

The banks will require more than a couple of percent down, Your land will be roughly 25% of the cost and you think you can get away with only 10% of the land cost as down payment. I'm not foreseeing a lot of success with that.

Many banks will accept a paid off building site to cover their down payment requirement. You put up your paid-for lot worth $100,000 and they will loan you the money to build on it.

Either save up some more money, or find and buy the lot and get it paid off before you try to proceed.

Silverfall · 06-25-2019, 11:41 AM

Go to Umpqua. They will do a 95% construction loan which includes the payment for the lot. It is an all-in one so it automatically converts after the build to a mortgage without having to do a refinance. It's a great loan product and I've had clients use it.

I also think WaFed (Washington Federal) does one that is similar, but my clients have always used Umpqua.

Nell Plotts · 06-26-2019, 09:37 AM

Setting aside the financial issue - be aware that most electrical inspectors are former electricians and, at least in Portland Metro, want to see that permit issued to a member of the IBEW. Think strategically here. Electrical inspectors are State, not local, folks. The inspector still wants the permit issued to a licensed electrician.

My example is 40 years old but my husband built our home and used a commercial electrical panel which the inspector flagged because it was in a residence. Husband is an Architect and knew this guy was ... in error. He went to the inspector's manager who sent out another inspector, no problems found. We learned that the first inspector was upset because we didn't use an IBEW electrician. His boss moved him to a less attractive territory as a consequence.

Don't get the impression that I don't like the IBEW, in fact, I think it is a great organization. A do it your-selfer just needs to know the expectations of building officials. Everyone should have a friend who is an electrician and another who is a plumber.

Larry Caldwell · 06-26-2019, 06:23 PM

Quote:

Originally Posted by Izzie1213

I know my BIL had to get a permit for building the house and it was only good for so long, maybe one year. It is a good sized somewhat complicated house so took longer than what a more simple rambler style home. He and my sister both worked full time so they were right up against the one year on the permit and get COO. There were a number of weekends a bunch if friends, really mostly family, would be asked to help do a bunch of basic work. Put seal and water proofing on outside basement walls. Place sod when it was delivered. Pound some nails when where needed. Paint drywall. Clean before finishing done, stain woodwork etc. He also had a plumber and electrician uncle's.

Building permits expire six months after the last inspection. All you have to do to keep the permit current is call for an inspection every five and a half months. Some permits have been open for years.