Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm a first time buyer. I'm trying to build a new house. The base price is $119,400. It's 1642 sq ft. It's on a corner lot with a $3500 premium, which was waived. I added two pre-contract options: linen closet in the bathroom and stone veneer on part of the front and sides, bringing the base price to $121,550.
I have no dependents, I have a of FICO just a tad under 800, made a bit over $55K last year, have only school debt at $86/month (car is 2007 and is paid off), and planned to put 5% down and pay all closing costs myself. Planned to do an 80/15/5 mortgage at 4.875% and 7.75%.
Still in the early stages (ground hasn't been touched). Everything was going smoothly until my lender told me today the appraisal value of the house I'm planning to build is only $122,000. This is right on the edge and gives me not very much room to finance any upgrades, such as spray-in foam insulation, sprinkler system, built-in microwave, kitchen island, patio (standard patio is only six square feet), garage door opener, sod, or surface materials. I feel dumb for opting for the stone veneer now (which can't be changed).
This builder appears to allow a lot of flexibility, with a large design center and many choices. The standard issue items are uniformly the same or lower quality than what I've had in my apartment the past four years, but I was okay with upgrading a number of items and did like the choices available. Unfortunately it appears as if the design center and said choices are an illusion. Most things would be "out of pocket" upgrades.
The appraiser reported that the information from the builder was that this plan, WITH UPGRADES, is generally selling for $119K to $125K. Based on this the lender gave me $122K.
I find it hard to believe that the appraiser would have based his/her opinion of value on what the builder told him/her. It is, however, entirely possible that other houses, similar in size, appeal and ammenities, sold for that amount.
Unfortunately, because we have to use a form, we cannot give a range of value on the appraisal report, which would be more accurate than a given number. But of the appraiser came up with a range of $119 - $125, the lender is fully entitled to use the loan amount og $122. It is their money!
Location: Visitation between Wal-Mart & Home Depot
8,309 posts, read 38,764,983 times
Reputation: 7185
Quote:
Originally Posted by Nepenthe
Wondering your opinions on this.
I'm a first time buyer. I'm trying to build a new house. The base price is $119,400. It's 1642 sq ft. It's on a corner lot with a $3500 premium, which was waived. I added two pre-contract options: linen closet in the bathroom and stone veneer on part of the front and sides, bringing the base price to $121,550.
I have no dependents, I have a of FICO just a tad under 800, made a bit over $55K last year, have only school debt at $86/month (car is 2007 and is paid off), and planned to put 5% down and pay all closing costs myself. Planned to do an 80/15/5 mortgage at 4.875% and 7.75%.
Still in the early stages (ground hasn't been touched). Everything was going smoothly until my lender told me today the appraisal value of the house I'm planning to build is only $122,000. This is right on the edge and gives me not very much room to finance any upgrades, such as spray-in foam insulation, sprinkler system, built-in microwave, kitchen island, patio (standard patio is only six square feet), garage door opener, sod, or surface materials. I feel dumb for opting for the stone veneer now (which can't be changed).
This builder appears to allow a lot of flexibility, with a large design center and many choices. The standard issue items are uniformly the same or lower quality than what I've had in my apartment the past four years, but I was okay with upgrading a number of items and did like the choices available. Unfortunately it appears as if the design center and said choices are an illusion. Most things would be "out of pocket" upgrades.
Thanks.
It used to be the case that you could get a favorable appraisal for additional options/remodeling if you informed your loan originator ahead of the appraisal. New laws have been enacted that make the appraisal much more arms-length and 3rd partyish (which is good and bad, mostly bad for people in your situation). There may be some recourse through an independent appraisor of your selection, but there are no guarantees.
Building a house is a big undertaking. I think you are priced just about right at $122,500 for your salary although you may find yourself a hair farther towards "house poor" than you expect. That house is probably going to cost about $15,000/year to operate, neglecting things like lawn & garden, flood/wind insurance, miscellaneous repairs, fix-its and SHEET happens. Sometimes BIG sheet happens, like foundations and plumbing.
It seems to me that delving into the design center options and rolling a bunch of additional expense into your mortgage is not the best way to go, particularly in this housing/economic environment. In any case, I would not make a home purchase that exceeded 2.5X my gross annual income.
EDIT: By the way, is this a 2 bed, 1 bath bachelor pit? Just a thought, but those can be difficult to sell because there just isn't a huge market for them so you may want to focus on personal economics ahead of resale.
Last edited by jimboburnsy; 04-29-2009 at 09:52 AM..
Is there a problem? I mean you can afford one thing and want another. Welcome to life.
I don't mean to be flip, but there are lots of things I would like own that I cannot afford. Patio is a classic DIY /hire latter kinda thing, as are the kitchen upgrades. If you can't afford them you have to save up for them...
With out seeing the home and stone veneer I have no idea if it makes sense to have these kinds of upgrades in TX, but I do know that some kinds of facade upgrades do pay off more than others in tracts in different regions.
When it comes to stuff like spray foam insulation I would literally give up almost anything to have this if it came with tax benefits and reduced energy costs.
Priority should be for stuff that lowers your ongoing costs and then stuff that builder can do cheaper than you ever could. I doubt a built-in microwave fits in that category ;^)
It is, however, entirely possible that other houses, similar in size, appeal and ammenities, sold for that amount.
Probably the case. The neighborhood is pretty new -- the three or four blocks where my property is/would be located are totally vacant. Beyond that there are houses only a couple of years old, but I see some decent values on both the tax appraisal site and on Zillow for those. Certainly I was thinking $135K was not beyond reason at all. I'm in an area where new house base prices can go from $100K to $140K for the exact same plan within only a few miles.
40% is a HUGE premium to pay for a few miles. Is there some kind of school boundary, or chemical plant or railyard??? Something???
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
