I had something similar once. Big banks and lenders don't know how to deal locally. Try a farm credit loan. They will often make residential loans. Usually, the only criteria is rural area. You don't have to farm to be eligible. They usually have good rates, too.

yep, your problem is that you are goign rural and many lenders won't do rural. my house is zoned agricultural so when we bought and it and when we did a refi we had several lenders outright say no because of this. goto a BROKER and have them find you something.

oh, and expect higher insurance rates. around here if you are not within 1000 feet of a fire hydrant your rate are automatically 2x what they would be otherwise. luckily for me the hydrant is right on the corner, our water association puts them every 1800 feet just so that everyone qualifies for lower insurance rates. kinda funny to see a bunch of hydrants and no houses anywhere near!

We built in a new community with large lots, so no houses sold to compare for us either. The closest ones were not comparable. Our bank had no problem comparing our home to homes already built in our community, based on their appraisals instead of selling price.

Only a small percentage of our final cost was mortgaged. Local bank sold it to CitiMortgage. In Feb, DS wanted to buy a condo in downtown Chicago that was a foreclosure. We were able to get him financing and close within two weeks. He financed 1/3 of the condo and got a good fixed rate.

I would suggest you contact CitiMortgage and see what they can do for you.

We had the same problem. There are several homes near us that are as nice as ours or just a little bit less than ours, but they have not sold. They were all put up for owners of the property. We had to decrease the size of our house to accommodate the bank. Our banker said that she had to look at the mortgage with the idea in mind that we might walk away from it and how would she then sell a house that is way nicer than any in the area. We plan on being in our house until the end (you know, the coroner takes us out). We have great credit, great jobs, can afford way more than the mortgage and she still had her hands tied. We are also in a rural area.

We ended up going smaller and she met us in the middle by going outside the normal area and age of sale for her appraisal. It was touch and go when it went to the underwriter and we had to jump through a few hoops to get it approved.

We ran into a similar problem. The loan had been approved, but the appraisal did not come back high enough to even cover the cost of construction because we are in a very rural area, not many comps, etc. We would have had to bring lots of extra $$ to the table. Our builder saved the day - he knew an appraiser he had worked with before who had a lot of experience appraising rural properties, and in our case log homes, and the 2nd appraisal came back just fine. If you have a builder selected, you might see what he or she can recommend.

We had to deal with the same problem. Right now there are not a lot of houses selling and when they do it is at such a reduced price just so the owner can get rid of it. (In our area anyway). That really hurts the appraisals. Even if your house was similiar to those in the area you could run into problems right now with financing. We are just now building and as things are right now we will have an "in house balloon" loan unless the economy improves. The after-market will not buy your loan unless it fits their standards with the appraisal. Until the economy gets better I don't see that situation changing much. Good luck!

Thanks for your reply's. I am totally frustraited. kimkiss I have the same option as you. A short term loan at a higher rate with a balloon. With Today's economic news, I doubt that in a couple of years the economy will help out the homes in my area, and I fear we would be stuck at refinancing at a much higher interest rate. The falling dollar, high energy prices, I really feel this country is in for a blow that we have not felt in my lifetime. (much as what our parents or grandparents felt in the 1930's). I may not pull the trigger on this deal even after all this planning.....The problem is, if there are other folks facing my delemma, then other people suffer too, the bank, the builder and all the builders suppliers etc. When does this cycle end????

Find a loan BROKER.
A bank only sells its own products.
A broker normally has access to multiple lenders.

Ask for referrals from any friends who have purchased recently until you find a broker that has performed well.

I agree with brickeyee. Brokers also close many more loans than local banks and have more resources, especially when it comes to third parties like home inspectors, appraisers, pest inspectors etc.

We had a lot of the same issues. We had to shop around a little bit. We have a large piece of property ( paid for) in a rural area and built a much larger home than average for the area. We were prepared for it though... our original purchase 14 years ago was actually an agriculture loan- easiest way for us to get the deal done. It was a little higher interest. To do the construction loan we also had to do an ARM but got a long term ( 6 years) and a low interest rate so even if it goes to it's max we are below what we have had in the past. We will still probably try to get a lock on a lower rate at some point.

The key to our deal was a local bank that didn't sell it's loans. The down side - within a couple of months of obtaining our loan the bank was sold to a larger enitity that has now been merged with yet another ( larger) bank. We have crap for service.

Good Luck. It can be done. It makes no sense that it should be so much more difficult.. but unless you fit the pidgeon hole it is.

PD

The real problem is that home loans are backed by Fanny Mae and ??(can't remember the other), which allows the lower interest rate. If your home is on "acreage" Fannie Mae will not back the loan. The next step the bank takes is to get an appraiser to find a similar home on similar acreage for appraisal purposes so Fanny Mae etc will accept. This is very proper mortgage process and is actually a problem we will also have as we are on 22acres..so we have made a point of doing things in our home to allow it to be more "normal", i.e. our study has a closet and exit window and is labeled bedroom on the plans (we only have 2 reg. bedrooms). If the appraiser can't find a similar home you will pay the extra finance costs.

Have to admit it would be nice if this was something home buyers knew..but we all tend to think what we are used to is the norm.

The bank has a legitimate concern. I don't know where you are building, but I am originally from a rural area where people moved into the area and built nicer than average houses and when it is time to sell they do not get their money out of the houses because the locals can't afford the those houses and other people who move into the rural area to enjoy rural life build their own homes so the houses get sold for a loss. Your credit is good now, but you could be in a car accident that destroys your credit rating over night (well in 3 years when the litigation is complete). The reality is that the risk of building a nicer than average home in a rural area has to be on you, not the bank. Since you have lots of cash, another option for you would be to increase your down payment so that the principal amount of the loan is less than the rural value of the house. This also happens to the locals too--those who can afford to build nicer than average houses do so knowing that they probably won't get their money out of them if they have to sell them in the short-term.