Posted on: 20th Mar, 2010 08:55 pm
I received my owner-builder, construction loan in November of 2003. The loan amount was set at $145,000, to be dispersed in eight draws.
I only used the first three draws, which adds up to $60,000, the amount that I now owe. From that point on, I only paid cash for materials and any needed labor.
At present, my home is about 3/4 done. It only lacks drywall, kitchen cabinets and interior trim. The exterior is finished. The house could be completed quickly for approximately $40,000, but I really don't want to go into debt any further.
Even with the big drop in RE prices since 2007, the unfinished building and land easily have a value of $400,000+. It's a 5000 sq. ft custom home that sits on a heavily treed, 2.5 acre hilltop parcel in a great area of town. There is no other debt on the home or any property tax problems. I've owned the land free and clear since 1999.
The loan company is now telling me that he must "call in" the loan because the house hasn't been completed. I've never missed any payments and actually made a few additional, principal-only payments in 2009.
For about four years, there was no correspondence at all from the finance company. Now, in March 2010, the loan officer calls me and says that I have no choice but to pay them the $60,000 within 30 days. They're not offering any other options. I requested that the loan terms be changed to a five year schedule, (roughly $1000 per month for 60 months) but the loan officer said "No."
I've been told that a private-lender loan is a possibility, but it would likely come with a high percentage rate. The local banks here want four times the loan amount in collateral (cash) before giving a personal loan. Not an option for me.
I don't want to go into any additional debt and wish to continue building at my slow pace, as funds dictate.
QUESTION ONE: Can they actually foreclose and take my home for such a small percentage of the actual value of the home? This was built as my dream home. No corners were cut and it is far from being a "spec house." I had planned on living here for the rest of my life.
QUESTION TWO: Is there another type of loan that might be applicable to my situation?
Thanks!
I only used the first three draws, which adds up to $60,000, the amount that I now owe. From that point on, I only paid cash for materials and any needed labor.
At present, my home is about 3/4 done. It only lacks drywall, kitchen cabinets and interior trim. The exterior is finished. The house could be completed quickly for approximately $40,000, but I really don't want to go into debt any further.
Even with the big drop in RE prices since 2007, the unfinished building and land easily have a value of $400,000+. It's a 5000 sq. ft custom home that sits on a heavily treed, 2.5 acre hilltop parcel in a great area of town. There is no other debt on the home or any property tax problems. I've owned the land free and clear since 1999.
The loan company is now telling me that he must "call in" the loan because the house hasn't been completed. I've never missed any payments and actually made a few additional, principal-only payments in 2009.
For about four years, there was no correspondence at all from the finance company. Now, in March 2010, the loan officer calls me and says that I have no choice but to pay them the $60,000 within 30 days. They're not offering any other options. I requested that the loan terms be changed to a five year schedule, (roughly $1000 per month for 60 months) but the loan officer said "No."
I've been told that a private-lender loan is a possibility, but it would likely come with a high percentage rate. The local banks here want four times the loan amount in collateral (cash) before giving a personal loan. Not an option for me.
I don't want to go into any additional debt and wish to continue building at my slow pace, as funds dictate.
QUESTION ONE: Can they actually foreclose and take my home for such a small percentage of the actual value of the home? This was built as my dream home. No corners were cut and it is far from being a "spec house." I had planned on living here for the rest of my life.
QUESTION TWO: Is there another type of loan that might be applicable to my situation?
Thanks!
Welcome paysonroundup,
It is true that if you go for a personal property loan, it would come at a higher interest rate and you will have to give a lump sum amount as down payment. As the lender holds the lien on the property for $60,000, he has the rights to foreclose it if you are unable to pay off the amount. You will have to try and negotiate with your lender in order to see if he can give you some extra time to pay off the loan.
You can contact your local lender and try refinancing the loan. This may help you in paying off your existing construction loan and save your property.
It is true that if you go for a personal property loan, it would come at a higher interest rate and you will have to give a lump sum amount as down payment. As the lender holds the lien on the property for $60,000, he has the rights to foreclose it if you are unable to pay off the amount. You will have to try and negotiate with your lender in order to see if he can give you some extra time to pay off the loan.
You can contact your local lender and try refinancing the loan. This may help you in paying off your existing construction loan and save your property.