Please call Fulton Bank. They have been great to work with in the Central VA area.

To protect yourself you should educate yourself *before* you make any big decision. It would be a good idea for you to know the market value of your home-based on the 'sold' prices of homes like yours in your neighborhood. The situation you are talking about - with homes selling after a long time on the market, way below their asking price reflects sellers/agents not pricing the homes correctly for the current market. The builder you are meeting with sounds like a large one, they may have their own agents who will do a market analysis on your home to find out what they could likely get out of it. For them to take the risk of owning your home and the hassle of re-selling it they need to make some money. If they do not make 'much' on the sale of the homes they take in trade then you have to look at other areas where they are making their profit. Some builders will offer you financing-they may make a great deal of their profit from this avenue of income. You really need to shop other loans and compare fees, interest rates, loan structure etc. We had some problems in our area with builders offering financing packages to buyers with their 'preferred lenders'. The loans were above market interest, had higher fees and prepayment penalties. The builders in question offered incentives to their buyers to go with the preferred lenders-they would knock several thousand dollars off of their asking price, which of course was not a 'real' savings just a way to get a buyer to go with their loan program. When such loans are sold to larger banks the originator of the loans gets 'back end' money in addition to their up front charges because the terms favor the lender vs the buyer. Finally, even if the house trade in and the builder financing checks out, you still need to be comfortable with the builder's ability to build you the house you want with the level of quality you desire. To be honest it would surprise me if a large builder that offers these services and is building subdivisions would also build a single custom home on acreage or lot that you found. Perhaps I am overstepping here and should just stick to the original question but I'm reading between the lines a little bit... I feel a little concerned for you because it seems as if the convenience of having a builder buy your home and provide financing might be so attractive that you would jump on that opportunity without shopping around or really examining your options or the builder in question. Perhaps that would work out ok for you if you 'lucked' into the right builder and if the security and convenience of having some of the steps handled for you and not having to move twice is worth the higher cost you will pay. But then again you might choose the wrong builder for the wrong reasons. While the sale of your current home and financing your new construction are definately key to the success of the entire project, remember that the most important qualification of a builder is that they can provide you with a well built home. Perhaps you should get together with a good lender and learn about different ways you can make this work beyond the ones you have thought of so far. I hope that helps, and if I've misread the situation I'm sorry. :) Good Luck!

I agree with the escrow account (a CD account might work too). That should satisfy everyone. Your lender requiring this is nothing out of the ordinary and I assume is in your contract (if not they most likely have no leverage). Our county required us to put in all trees and plants of types they specified (but no sod). And we had to do that before they would allow our CoO. In fact, they wanted it done before the house was framed. Yep, before it was framed but we ignored that part. Can you imagine GC and his crew trying to tiptoe around the tulips! Literally! Plus the stuff they required was indigenous in a highly fire prone area...morons! Anyway, after we got the CoO we made some changes as recommended by our local fire department.

Pamghatten: Not ALL standards have tightened .. but the documentation requirements have greatly changed, thankfully. Well, I'm not quite as thankful as you are since an underwriter rejected my mortgage application one week before the scheduled closing. Before I get into the particulars, let me give a little primer to those of you not familiar with federal employment and retirement: Although separate agencies within the federal government hire and employ their employees based on their own rules and regulations, there is one central personnel agency that handles benefits such as retirement for everyone: the Office of Personnel Management (OPM). When an employee is getting ready to retire, their own agency can provide a benefits statement indicating what the estimated annuity will be, but it is subject to review by OPM and is not official until OPM performs their own calculations, sometimes 6-8 weeks after you retire. I'm sure that you can see where this is going.... My agency's HR department provided a memo to Bank of America indicating what my "estimated" annuity will be, down to the penny. The memo literally said that my present annual salary is xxx,xxx and that the gross annuity would be x,xxx.83 per month and the net after taxes and other deductions would be x,xxx.71 per month. Once OPM conducts their own review this could change by a few dollars a month; however, we are talking about a possible change of .001 of the total amount. Nevertheless, because my agency (or any federal agency) is only allowed to say that the amount is an "estimate," the underwriter would not approve the loan at this point in time. Oh, did I mention the fact that I was already putting down over $200,000 (~50%) and also have a FICO of 800? Fortunately, the proceeds from the sale of my house in Bethesda last November were still in a money-market account and were more than enough to pay cash for the house in Las Vegas, otherwise I would have had to sell equities to purchase the house (either that, or let the sale fall through). We've gone from an era where underwriters would approve loans to anyone with a heartbeat, to one where people with guaranteed incomes for life and a seven-figure net worth can't qualify for a loan