Remodel: Is bank permission required?

[DCal430]

I know if the entire structure is knocked down you need the bank permission, but what about remodeling. Is their a limit you can do before you need to notify the bank?

I know someone who purchased a 2100 sq ft home, with 10% down.

During the remodel: They plan to remove around 75% of the non load bearing wall, remove 90%+ of plumbing and electrical. Expand the home to 3200 square feet. New internal walls, floor plan, plumbing, electrical, cable, and telephone will be added. Also 90%+ of plywood on external walls and load bearing walls will be replaced. All windows and doors will be replaced as well.

In fact so much is being done, the county has informed them that laws for new construction will apply to their property, such as fire sprinklers.

To what extent can you remodel without requiring a banks permission?

 

[ElFenix]

read your his mortgage and find out. that's a significant amount of work on the bank's collateral.

 

[boomerang]

If the bank goes under do they send everybody a head's up letter? Do unto them as they would do unto you.

Disclaimer: This advice may be wrong. It may in fact be very, very wrong. Take this advice at your own risk.

 

[DCal430]

This is a Fannie conventional loan, do this typically care about extensive remodeling?

 

[Greenman]

I've never heard of asking the banks permission, and I've been in the business for 38 years.

My guess is that if you mentioned it to them they'd want a completion bond, which would cost a fair pile of money.

 

[DCal430]

Yes, but it seemed odd that a bank would require notification on full tear down, but not this. The house isn't even remotely habitable during the remodeling.

 

[Red Squirrel]

As long as you're making your payments I don't see why it should be their business, no matter what the law says. TBH first time I hear of them even having to be involved, but not that I'm surprised. There so much silly red tape crap in this world, that's just another one. Better to check and make sure I suppose. The city should be made aware too, need permits and stuff too. That either I never agreed with (your property, you should be able to do what you want) but do it because if you don't they'll ask you to change it back. Whether you agree or disagree with the system sometimes it's easier to just play the game even if you don't want to play.

But I can't see why the bank would care though. You borrowed money, you owe it back, as long as you pay it back they should not care what it's actually being used for or what you are doing to what it's being used for.

 

[DrPizza]

But I can't see why the bank would care though. You borrowed money, you owe it back, as long as you pay it back they should not care what it's actually being used for or what you are doing to what it's being used for.

Because it's a secured loan. You get a lower interest rate because the property is there as collateral. That's why knocking down a property (no longer any collateral) concerns them.

 

[MongGrel]

Because it's a secured loan. You get a lower interest rate because the property is there as collateral. That's why knocking down a property (no longer any collateral) concerns them.

I was going to mention that myself earlier.

When you destroy the collateral you have on a property for the bank giving you the loan in the first place would be a pretty major issue I'd think.

You would basically be destroying what they gave you the loan for to begin with, unless it's really good land you managed to almost steal for.