Got my first real taste of the credit crunch/current lending market

[vi edit]

18 months ago when we bought a lot to build on it was a 10% down payment on the building costs to get a construction loan.

The wife and I started shopping around with builders trying to get an estimate on costs to build and we were looking at right around $300k to build. That's $30k. We got that.

Talked to the bank a week ago. "It's 10% down, plus we want to see that your have your current house listed".

Ok. So my wife and I start really kicking around the idea of getting our current house really cleaned up and on the market while the primary buying months of June & July are still available.

So we go back to the bank again this weekend and start talking to them about the steps to get started. The rep we are working with says "Yeah, we need to talk about that. Our insurers have increased the down payment requirements. It's now 20% to start".



$30k I got. $60k I don't.

It's not really bad news, and in a way it's a better decision for us. But that's a bit of a kick to the crotch. The mortgage rep said she's been calling people up all week as it was just put in place last Monday. She didn't have a fun week of work.

 

[DisgruntledVirus]

Build it yourself

 

[xSauronx]

damn

 

[Isocene]

l

 

[vi edit]

Originally posted by: DisgruntledVirus
Build it yourself

It felt like I was doing that anyway....
Stuff I was going to do:
- Block foundation
- Install my own hardwood flooring
- Install my own cabinets
- Run low voltage wires (cable, ethernet, phone)
- Paint
- Tile kitchen backsplash and bathroom floors
- Pour the driveway
- Pour back patio
- Put up all brick and stone work on front of the house
- Landscaping

Maybe in two years when we regroup I'll just scrap the builder all together and just go owner/builder and pocket the $25k-50K of contractor premiums.

 

[spidey07]

Bridge loan from your other house to cover the rest?

 

[vi edit]

Originally posted by: spidey07
Bridge loan from your other house to cover the rest?

If I got full appraisal value of my home and could move it with a flat list fee instead of having to use a selling agent I'd be *right* at the 20%. But that would completely decimate me of all cash reserves.

After a recent re-fi I'm shoveling over a grand a month of equity into the home. I'll just ride here for a few more years and build up even a bigger war chest.

 

[mshan]

According to Eric Tyson's "Home Buying for Dummies", 20% down was amount that lenders historically found protected themselves from significant loss if they had to foreclose on a property (remember, house is ultimately collateral for loan and they will want to sell it, not keep it).

Increased down payment requirement could reflect that lenders still think there is significant downside in terms of price in your area, and / or could just be plain old tighter lending standards.

 

[darkxshade]

Maybe it's a sign to sell the lot to that guy who tracked you down.

 

[SunnyD]

Originally posted by: darkxshade
Maybe it's a sign to sell the lot to that guy who tracked you down.

This.

 

[vi edit]

Originally posted by: SunnyD

Originally posted by: darkxshade
Maybe it's a sign to sell the lot to that guy who tracked you down.

This.

Ball's in his court right now. Told him it wouldn't move for less than $50k. He said he'd think about it. My wife and I really put some thought into the proposal. We both came to the same conclusion though. We want a different home than the one we currently have. So we'll be in a new home in a few years. But there simply is not another lot as nice as this one anyone near the price we paid for it in the school districts we want to buy into. The fact that it's in such a nice neighborhood and a couple minute walk from my parents is just icing on the cake.

We simply couldn't replace it.