We got our loan from a small bank in a small town. Our only problem now is we need about 35k more to finish, since our first builder turned out to be a scam and made a mess of our house and took off with lots of money. We're hoping the bank will give us the money to finish. We will be close to finished when the money runs out. The remaining money is to pay the builder and finish up the electrical and heat. I can't handle waiting. We have a claim against the first builder's insurance company for negligence, but I don't have much faith in the justice system anymore, so I don't even consider the possibility of getting any money back. We've had such bad luck in this whole process, I just keep assuming the bank is going to tell us we can't get the money and then I don't want to think about what we'll have to do. We've done a pretty good job of not using credit cards. We've used cash to pay for quite a few things. My broker is just dragging his feet on gettng this appraisal and it's killing me. I met with him in August to set up another appraisal so we wouldn't be in this position of wondering as we're getting to the end of the money, and we still don't have it. So frustrating!!! Thanks for letting me vent.

Most home remodels that are being done are with cash or HELOC's. I don't know of anyone in the past 18 months who has gotten a home remodel loan. Banks have gotten way too bit from "house flippers" who thought they could turn a profit by cheaply putting lipstick on pigs. Most will do HELOC's because the amount is smaller and secured by the equity in the home. A true home remodel loan will require extensive vetting by the bank and appraisers over the plans to be able to try and verify the value after the remodel as well as the reputation of the contractors involved so as to be sure of the completion of the project. It's part voodoo and part neighborhood value. And you should NOT put the cart before the horse on this by fronting any materials before the loan is approved. Because it may not be. However, once the loan is approved, you should pay out of pocket to get it started if need be. You should always have a safety cushion for those type of expenditures that the bank is hurry up and wait on. And at least a 20% cash cushion for overages. You will need that, and maybe more on older homes. Plus, the bank will have a difficult time approving a loan unless you can prove you really don't need a loan and actually have the cash or home equity to do the project outright.

New bank does construction loans all the time and approved us even if the loan to value goes above the 80% as our finances are all sound. They understood contingencies, overruns, etc, and will actually be doing $600k so there’s a little bit of buffer. Spoke with the initial bank rep and bank manager today to close out the loan and they both apologized, with rep even saying they were a little worried about other things that may pop up down the road if this had already started with first disbursement - so I think we may have actually avoided a train wreck down the road.

The GC will be required to build the garage if it is in the original loan documents that were bank approved. It would not be allowed to be built by a third party not under the control and supervision of the bank approved GC. If you or the Amish gentleman have a contractors license and insurance, the GC can certainly subcontract that portion to you, and you can build it. If the GC agrees to that. I would not plan on that happening. If the GC would take on the liability of hiring you as a laborer under his workman’s comp, then he could do so, and instruct you as an employee to build the garage. I would not plan on that happening either. Free liability is a hard no thanks. In all situations, it is the GC that will need to be paid by you via bank disbursements for building the garage, as that is the professional that the bank approved to be responsible for the build. The bank has not approved you to be involved as a co GC, or to work on their investment, or to hire whomever third part. All job responsibility goes through your GC. You are the funding conduit between the bank and the GC as the owner only. You don't ”recoup” cost overruns. Those are expenses that add to the COST of the build, but not the VALUE of the build result. They are spent and gone. Your savings account is permanently depleted until such time as you add to it again. If the bank agrees to reimburse you for the documented overruns, then you will just have to pay it out all over again when the specific loan amount runs out, and the project still needs that money to reach completion. If you do manage to cut build costs somewhere , that does nothing for your savings account. It does affect the loan amount. Cutting things also affects the value of the house, which will likely require a reappraisal and redo of the loan. That will require you to bring more cash to the table to cover the value shortfall. This is a shell game that only the bank wins. You always end up out the extra costs.