Best way to increase appraisal value of land- pole barn or pond?
kelhuck
12 years ago
Featured Answer
Sort by:Oldest
Comments (26)
Billl
12 years agoLuAnn_in_PA
12 years agoRelated Discussions
Cooler Weather/Increased Rain Chances
Comments (22)Jay, I was in a really cranky mood by late afternoon yesterday because our high temperature once again over-achieved. Our forecast was for 98 and we hit 106. This constant over-achieving on the part of our high temps is driving me up a wall. However, rainfall finally arrived accompanied by much lightning, wind, thunder, etc. and we had several little showers run through one after another. We ended up with a tiny bit less than 0.7"....maybe 0.65 or 0.68". It was wonderful to have rainfall again, and the temperature plunged from 106 to 79 before dark. I know that the less than 7/10s of an inch is only a drop in the bucket compared to what we need, but eventually all those drops in the bucket will add up. Today is supposed to be cooler--only the low to mid 90s, and then 98 again tomorrow (wonder if I should expect 106 again?) before another cool-down arrives. This morning has remained cloudy and cool, so the house is quiet, quiet, quiet because the AC hasn't been running. The clouds are burning off now, so I guess the AC will kick on in a little while. Were it not for the near-epidemic levels of West Nile Virus around me, I'd have spent the cool, cloudy morning outside working in the garden. Since the mosquitoes that transmit it are most active in the early morning and early evening hours, I guess I'll go outside at midafternoon and work when the mosquitoes are less likely to be out. I haven't seen many mosquitoes, but I sure don't want to be bitten by one carrying WNV. The news stories of the horrible West Nile Virus aftereffects occurring even to some young people in their teens through their 30s make me wary of taking a chance on being bitten by one of those skeeters. Normally the older you are, the harder the WNV hits you. In recent tests of mosquitoes trapped in the Dallas area, 50% of the mosquitoes tested were carriers of WNV and I don't like those odds. If we hadn't had rain, the prospect of having mosquitoes around wouldn't bother me as much. But then, if we hadn't had rain, I wouldn't feel like I should be out doing anything in the garden. The rains, skimpy though they may be, are reviving some plants, but others are just too far gone and I might as well yank them and clear those areas for fall planting. Dawn...See MoreTotally confused with land and construction loans....
Comments (8)Kelly When you say "We are in contract on the lot" - with whom? Is it an independent seller of the land or with a builder? if with a builder - what type (custom home builder or large residential builder like Toll Brothers)? These answers are needed to better help you out. If you put a contract on a lot with an independent seller of the land - then don't do a seperate land & construction loan. Simply wait until your current house sells and buy the land with that money. I will explain why in a minute. If you are buying through a custom builder who owns the lot, then don't do a land loan either. If you are buying through a large residential builder, the land and house are bundled together in the purchase price and the mortgage loan you get will cover both land & house. Only 1 loan is needed - and you don't close on that loan until the house is done. Getting a loan on bare land with no house on it is expensive (higher interest rates and harder to qualify ) because it is a bigger risk to a bank. It is usually harder to sell bare land than one with a house it (exceptions to this rule are in places like Malibu, CA). Why pay points, loan origination fees, and closing costs on a seperate land loan that you can purchase with cash? Typically when you apply for a construction loan, the land value is included as part of the estimated value of the house/land when it is complete. This is important because that total value will be used to calculate how much money you can borrow. Let's say your land is worth $50K (and you own it out right with no loan) and the house when complete is worth $350K (the appraised value) - then the total appraised value of the property when completed would be $400K. If you put 25% of your own money (the land value and your planned cash into the house is included) into the construction project, then the bank will let you borrow $300K for the house project assuming you qualify for that payment. Note that the appraised value of the house IS NOT the contract price for the new house. The construction loan can be seperate from the mortage BUT I would not recommend you go that route. There are banks who offer construction loans that will convert into the mortgage when the house is done. You close once on the construction loan (pay points & loan origination fee + closing costs) at the start, then you convert at the end and pay no other CLOSING costs. BUT watch out for this, at the end when you convert you will have to pay up to 6 months of estimated future taxes & insurance to seed the escrow account for your new mortgage loan so you will need to bring money to the table when you convert at the end (these aren't CLOSING costs per se but it is money out of your pocket). But at least you only pay closing costs and loan orgination fees once instead of twice. The way the construction loan works is basically like a line of credit. You only pay on the loan amount as you draw from the line of credit - and multiple draws occur as the house is built (5 to 7 draws are typical). These draws are tied to completed stages of the house like plans complete & permits approved, foundation complete, framing & roof complete, rough in plumbing/electrical/HVAC complete, drwall complete, painting complete, final finishes complete, etc. So during the construction process - your monthly payment on the construction loan will incrementally increase as draws are paid out to the builder. That is why I suggest that you use as much of your own cash to make the initial draw payments to the builder and then draw down on the construction loan as late in the process as you can. Reason is that you want to minimize your payments on the construction loan - which are essentuially just interest payments. If you are paying rent and construction loan costs at the same time you can see that minimizing the double payments for as long as you can make it easier on you financially. Example. let's say that you own that 50K piece of land and you have another $150K in cash from the sale of the house. You decide that you want to keep $50K in your pocket (to cover any possible overages - a good idea) and the other $100K to be used on the new house, and you have the $300K loan ready to go (so you have up to 400K to cover building costs on a project that should cost let's say 300K). So you start the project - you use YOUR $100K of money to pay the builder for the first 2 or 3 draws and the bank money money to cover the rest (you can also do a mixed payment where you put in some of your own money and you use some of the the bank money to cover a particular draw). So you pay the first $100K and let's say the house winds up actually costing you $325K because of a few oopses and some upgrades you decided to make. At the end, you only used $225K of bank money and $100K of your money. You only paid interest on the portions of the $225K as you paid the builder. You don't pay interest on the other $75K that you did not draw from the bank. When you convert the construction loan to the mortgage, your new mortgage will be for $225K. If you can use your money to cover the initial few payments to the builder you might not not have to make a constuction loan payment until 2 or 3 months into the build - and that is 2 or 3 months worth of payments that you keep in your pocket. In our build, we started the project in Sept 06 but did not make our first interest payment to the bank until late Spring 2007 which was nice because our house wasn't finished until Dec 2007 - 6 months late. You could do 2 seperate loans - one for land and one for house - but hopefully you get the point that you don't have to do it this way and it would cost you a lot more money (in loan fees and monthly payments) to have 2 seperate loans. I Hope this helps....See MoreLength of time from land purchase to build?
Comments (29)I've heard some people say they were unable to include the cost of well/septic in their construction loan, glad to hear this isn't always true. Dh still would move forward with the purchase of the property despite the findings of the septic inspection. (He and I still don't agree on this, but he did finally say he would consider decreasing our purchase offer at least.) Sure wish the appraiser would know if it were usable. I know the size of septic you need depends on the size of your home and number of bathrooms. That's one thing that worries me, the trailer that was there was 3br maybe 2 bath. I plan on 3 bedroom with at least 3.5 baths if not 4 . I am hoping the existing septic will be suitable for something larger than 1200 sq ft . It's been a week and I still don't know if the lender has scheduled the appraisal, she's terrible with communication!...See MoreHave you had your home appraised?
Comments (49)The reason I'm confused is because people refinance ALL the time to lower their rates and these days, it's pretty unusual to see a prepayment penalty. I'm not saying it's wrong, it's entirely dependent on the type of loan you did, but just to be sure, I would double check your note to confirm a prepayment penalty clause is there and what the terms are. Refinancing is not a small deal and requires a specific expertise. If this man is lying and/or not doing his job, I would have a very difficult time trusting him with our financing. I might even be inclined to have a word with his manager and insist that a different loan agent be assigned to us. This is a little off topic, but figured I'd share anyways, but when I arranged for the loan to purchase our house, the loan rep kept trying to push us into an adjustable rate mortgage. I kept telling him no and insisted we wanted a fixed rate, 30 year mortgage only. On the day we went to sign docs we did it at the office of the Title Company. They get their instructions from the lender ie the loan rep and when they handed me the note to sign, it was for a 30 year Adjustable Rate Mortgage! I know from experience, that based on the conversations a borrower has with their loan rep, they trust the documents are accurate and they'll sign whatever is put in front of them without so much as a glance at what they're signing. And with us at least, the copies we were sent when the origination began, were for a fixed mortgage. Yet if it ends up being wrong at signing, the bank will tell you, you should have read what you were signing, and you are stuck. The commission for an Adjustable Rate mortgage was higher than that of a fixed rate loan and that Loan Rep was banking we wouldn't catch it. Well I did and I was really upset and made them redraw the docs. Since then, I've heard several times that the same thing happened to others in our area who had financed with that company which was a very large industry leader at the time. I can't say I feel bad that they are now defunk!...See MoreUser
12 years agokelhuck
12 years agoc9pilot
12 years agoCarol_from_ny
12 years agokelhuck
12 years agoguvnah
12 years agocymraes
12 years agoncrealestateguy
12 years agokelhuck
12 years agoliriodendron
12 years agoncrealestateguy
12 years agopamghatten
12 years agoliriodendron
12 years agokats_meow
12 years agoBilll
12 years agomaremma
12 years agokelhuck
12 years agoevaf555
12 years agoTLC Carpet Floors & More
6 years agoeandhl2
6 years agolittlebug zone 5 Missouri
6 years agolast modified: 6 years agolittlebug zone 5 Missouri
6 years agokudzu9
6 years ago
Related Stories
HOUZZ CALLShow Us the Best Kitchen in the Land
The Hardworking Home: We want to see why the kitchen is the heart of the home
Full StoryGARDENING FOR BUTTERFLIES3 Ways Native Plants Make Gardening So Much Better
You probably know about the lower maintenance. But native plants' other benefits go far beyond a little less watering and weeding
Full StoryLIFEThe Top 5 Ways to Save Water at Home
Get on the fast track to preserving a valuable resource and saving money too with these smart, effective strategies
Full StoryDECORATING GUIDES15 Ways to Get the English Cottage Look
Look to nature, inexpensive fabrics and small swaps to conjure a country-house vibe
Full StoryHOUZZ TOURSMy Houzz: A Prefab Modern Farmhouse Rises in Vermont
A prefab borrows from the simplicity of barns to suit its family and the Vermont countryside
Full StoryLANDSCAPE DESIGN9 Ideas for Thoughtful Gardening in 2014
Start the year with a new way of thinking about your yard. Does one of these garden experiences sound good to you?
Full StoryLANDSCAPE DESIGNHow to Move Water Through Your Landscape
Swales, underground pipes or a mix of both: There’s more than one way to distribute water in the garden
Full StoryHOME OFFICESThe 20 Most Popular Home Office Photos of 2015
Technology paves the way for space-saving work areas, while designers make up for small sizes with style
Full StoryREMODELING GUIDESHouzz Survey Results: Remodeling Likely to Trump Selling in 2014
Most homeowners say they’re staying put for now, and investing in features to help them live better and love their homes more
Full StoryHOUZZ TOURSHouzz Tour: A Ranch House Is Reborn in a Los Angeles Canyon
Can you get back to nature in the heart of an urban mecca? This family — and their horses, dogs and chickens — did just that
Full StoryProfessional Remodelers in Franklin County Specializing Kitchen & Bath
kudzu9