Beware of one thing when dealing with a bank and doing a teardown - unless you make it very clear to the bank that you intend to tear the house down, they will end up being very concerned when it starts to come down. We recently had a situation where we bought a house and took out a mortgage for only about 50% of the bank-appraised value. We bought the house because it was a fixer-upper and we wanted to tear it down and rebuild. It was in very bad condition, and everyone else looking at it during the time we were making an offer on it felt the same way...there's no way someone could have lived in the house for long without fixing it up. We even told our mortgage contact at the bank that we were planning to tear it down and rebuild (with our own cash not a construction loan). He seemed supportive and commented many times on what a great lot it was and how nice it would be when the house was "done." So, it was clear to everyone involved that it was planned to be a teardown. Long story short(er!) - we bought the house in Sept, and in January, when we had our completed architectural drawings, structural drawings, had received building permits and were ready to start demolition, one of the final items on my list was to obtain "course of construction" insurance, which takes the place of homeowner's insurance when you are dealing with a construction/teardown project. In the process of signing the insurance documents, I noticed that the insurance company wanted to know if the bank should be listed as an additional payee in the case of a claim. I called the bank to ask if they're typically listed on a course of construction insurance, and after speaking with a few different representatives (none of who knew anything!), I was transferred to the office of the VP of Risk Management (or something like that)...anyway, someone on her staff almost had a fit when they heard that we were about to tear the house down. She kept saying that our house is the "bank's collateral" and not ours to do what we wanted with and that we could not proceed until we had the appropriate bank approvals, etc, etc. Keep in mind that we were not asking for the bank to pay for the construction, we are paying for the construction in cash, and we had an appraisal (done by the bank's OWN appraiser!) that was completed in September which showed the value of the entire property to be $1,100,000; they even broke this down between the lot value (approx $950,000) and the house value (approx $150,000). We have a mortgage for $500,000 so obviously, even in a worst case scenario, if the house was torn down and never rebuilt, the bank has FAR more collateral in the land than they ever had in the rickety old decrepit scary house!! Still, this person INSISTED that she had to go to some sort of approval committee and get approvals before we had a demo truck even enter the property. My husband and I were furious (although also somewhat bemused by this bizarre lack of logic and ridiculousness) and we spoke with several others at the bank who listened to our story and believed us when we told them that we had been very clear with the mortgage person during our loan approval process, telling him all the time that we were buying a "teardown"!! Our point was that, if there were further approvals necessary, he should have told us about them up front. Finally, we had a senior VP reluctantly agree with us but we are still being hounded by this VP of Risk Mgmt who is still insisting that we need to forward her a copy of our contract with our builder, our approved architectural/structural plans and all kinds of other info! At this point, we're ignoring her (because we have the approval of the senior VP), and construction has started, but this has been a big pain and total surprise. I'm telling you this long story because it just illustrates how crazy and upside-down the banks are these days and how their underwriting/loan approval processes have gone wildly from one end of the spectrum (super wide open) to the other (absurdly tight). My husband and I are the perfect clients for them - we have stellar FICO scores, have a longstanding history of repaying all our prior mortgages (two of which were with them), and MOST importantly, the bank has MORE than enough collateral in our current property to cover it all even if we never paid another dime!! So, I'm sorry to say it, but like others have basically said, I would be surprised if you get a construction loan with your current situation, and IF you decided to and could somehow do it on a line of credit or home equity situation, BEWARE that the bank will have a fit if/when they find out that you're tearing your house (otherwise known as the bank's collateral) down. Sorry, I don't mean to be a bummer about all this but it's best to go into it with eyes wide open and know the current lending/housing environment. Whatever you do, best of luck!!

While this is not what you want to hear, I agree with hollysprings. If you are in your 60s, you likely have less than 5 years of earned income left. You should be planning to have your home paid for by retirement age. That is "partly" why they calculate 70% of your current income to figure your retirement income needed. Even if you are not paying cash for your whole build, you should be in the range to cover a good 50% or so, which I would figure would get you to the value that an appraisal would put on the home anyway. Your home would be very hard to sell as it is not what people are looking for. Therefore, you should be taking on a larger portion of the risk. Regardless of your builder not sharing his financials, an appraisal would still need done...and it is going to have a lower value because it is harder to sell. An appraisal is just that....how much will your house sell for in a a reasonable timeframe, not how much it costs to build. Aside from these things, do you really need 4000 square feet? I imagine I would need a lot less home when I am near retirement age than while I am raising 3 small children. My parents have 3 guest bedrooms. The room I stay in is larger than my master bedroom. All 3 of these rooms have larger closets than any in my current home. My mom likes a perfectly clean home and this house is too big for them to clean. If you want something unusual with the highest grade of finishes, then build a smaller footprint, and bring more cash to the table. Good luck!

This is one of those deals where the seller (investor) is obviously so far out of his depth that he is tragically exposed and you are probably somewhat insulated from problems. The appraisal clause alone will somewhat insulate you from problems while exposing him to massive losses or price reductions. A real estate attorney will enjoy making this deal work in your favor. However, I would walk away from the deal, the whole things seems a house of cards to me, and until he has actually completed projects and closed on houses, this whole thing could come crashing down around him. It is entirely possible that these houses are not going to appraise, and he simply may not be able to absorb those losses. Then you have mechanic's liens and all that jazz to deal with if you go through with the purchase.

For us, if we have a TV in the master bedroom, we want it to be across from the bed so my husband can watch TV before going to sleep. I would put the bed between the two windows on the left in the floor plan and might be inclined to put the TV on the wall between the bank of windows and the sitting room. Then I would put a lovely dresser and art in the niche between those built ins. Put two comfortable arm chairs and an ottoman in there. I would fill the shelves with some books and decorative accessories. It looks like a cozy little space to read or relax.