Posted on: 20th Dec, 2008 11:12 pm
Sorry for the long story, but more info gets better answers ;)
I've done a fair amount of research but not discussed this with any brokers yet (I prefer to be well informed before I listen to a salesman’s take on my needs).
My Wife and I have good stats so getting approval should be straight forward:
$6500 monthly income
$0 credit card debit
$220 student loan
$230 car payment (business vehicle) and Own 2 other good cars outright
Wife is a teacher with tenure
I'm an electrician with 15 years stable employment.
We also own outright a 2nd unadjoining lot worth about $140,000
Both Credit scores in the high 700's (perhaps as much as 800's now)
Our home has a first of ~$138,000 at 5.75% (4-1 arm that resets on May-2010) and a 2nd of ~$73,000 at 6% fixed (20 year term). Total of ~$212,000 owed currently, current payments of $1710 combined (T&I = $230 mo included). It is a 1997 manufactured and we live in Oregon.
My opinion of property value is about $375,000 giving us a LTV of ~57%. We used most all of that $75,000 2nd for remodeling and purchasing additional land form a neighboring lot (lot line adjustment), but not all so it will only qualify as a "cash out" re-fi. We now have 1.74 acres in the middle of the city limits where most lots are ~1/4 acre. Home is 3bed/2bath, 1800 sq/ft in 99% perfect condition (complete remodel) and is surrounded by low and high valued homes. We live in a desired area where it will rebound (eventually).
We want to subdivide this lot into 2 large lots, leaving the existing home on 1/2 acre, and using the remaining 1-1/4 acre for a future "dream house", we'll keep the existing home for a rental (long term retirement plan). The other lot we own will be sold when the market stabilizes and use those proceeds to begin construction.
We want to take advantage of the super low rates, and we want to lock in a fixed rate for the home we have now (our future rental). Our ARM margin is only 2.75+ 1year T-bill, so reset is not scaring me at all (would reset to ~3.75% if it happened today) but we still want fixed for the long run. Our current lender (same credit union on both loans) has been good to us, but they don't do construction loans, and don't want to deal with partitions.
I have found that I probably want a new loan with Partial release clause, (or partial reconveyance clause), but I can't find much info on that in a conventional type loan. I only find it in Blanket loans. I could potentially use the other lot in a blanket loan as I planed on using that $$ for home development anyway, but we are not ready for construction just yet personally. Those also seem to be very costly to underwrite, and it will probably be very difficult to find a lender on it.
Goals:
-get the existing home fixed at ~5% @30 years
-partition off a 2nd lot with no resultant balance so I don't have to refi the existing home during new home construction (construction may be in 2-5 years).
By my accounting, the resultant lot with existing home will be worth ~$220,000 and the new partitioned lot worth $205,000. One lender told me that I could do that as long at I kept the loan to within 65% LTV on the resultant lot (requiring me to pay down the balance to about $143,000). I can do that no problem when I sell the other lot I have as it's paid in full and after taxes/fees I expect about $110,000 from it. Problem is, I can't do it -right now- because of the crappy land market, so I need this "subdivide feature" built into the loan for future use.
Are there loans/lenders that can do what I want?
Would I be asking the right questions if I asked for a conforming loan with this partial release clause in it? If not, what should I be looking at?
If I have to do a short term loan for the purpose of dividing, and then refiing that, what type of loan should I get (construction loan or something else)?
I'd hate to get 2 loans just because of the fees, but also because I'm not ready to subdivide/build yet anyway.
I've done a fair amount of research but not discussed this with any brokers yet (I prefer to be well informed before I listen to a salesman’s take on my needs).
My Wife and I have good stats so getting approval should be straight forward:
$6500 monthly income
$0 credit card debit
$220 student loan
$230 car payment (business vehicle) and Own 2 other good cars outright
Wife is a teacher with tenure
I'm an electrician with 15 years stable employment.
We also own outright a 2nd unadjoining lot worth about $140,000
Both Credit scores in the high 700's (perhaps as much as 800's now)
Our home has a first of ~$138,000 at 5.75% (4-1 arm that resets on May-2010) and a 2nd of ~$73,000 at 6% fixed (20 year term). Total of ~$212,000 owed currently, current payments of $1710 combined (T&I = $230 mo included). It is a 1997 manufactured and we live in Oregon.
My opinion of property value is about $375,000 giving us a LTV of ~57%. We used most all of that $75,000 2nd for remodeling and purchasing additional land form a neighboring lot (lot line adjustment), but not all so it will only qualify as a "cash out" re-fi. We now have 1.74 acres in the middle of the city limits where most lots are ~1/4 acre. Home is 3bed/2bath, 1800 sq/ft in 99% perfect condition (complete remodel) and is surrounded by low and high valued homes. We live in a desired area where it will rebound (eventually).
We want to subdivide this lot into 2 large lots, leaving the existing home on 1/2 acre, and using the remaining 1-1/4 acre for a future "dream house", we'll keep the existing home for a rental (long term retirement plan). The other lot we own will be sold when the market stabilizes and use those proceeds to begin construction.
We want to take advantage of the super low rates, and we want to lock in a fixed rate for the home we have now (our future rental). Our ARM margin is only 2.75+ 1year T-bill, so reset is not scaring me at all (would reset to ~3.75% if it happened today) but we still want fixed for the long run. Our current lender (same credit union on both loans) has been good to us, but they don't do construction loans, and don't want to deal with partitions.
I have found that I probably want a new loan with Partial release clause, (or partial reconveyance clause), but I can't find much info on that in a conventional type loan. I only find it in Blanket loans. I could potentially use the other lot in a blanket loan as I planed on using that $$ for home development anyway, but we are not ready for construction just yet personally. Those also seem to be very costly to underwrite, and it will probably be very difficult to find a lender on it.
Goals:
-get the existing home fixed at ~5% @30 years
-partition off a 2nd lot with no resultant balance so I don't have to refi the existing home during new home construction (construction may be in 2-5 years).
By my accounting, the resultant lot with existing home will be worth ~$220,000 and the new partitioned lot worth $205,000. One lender told me that I could do that as long at I kept the loan to within 65% LTV on the resultant lot (requiring me to pay down the balance to about $143,000). I can do that no problem when I sell the other lot I have as it's paid in full and after taxes/fees I expect about $110,000 from it. Problem is, I can't do it -right now- because of the crappy land market, so I need this "subdivide feature" built into the loan for future use.
Are there loans/lenders that can do what I want?
Would I be asking the right questions if I asked for a conforming loan with this partial release clause in it? If not, what should I be looking at?
If I have to do a short term loan for the purpose of dividing, and then refiing that, what type of loan should I get (construction loan or something else)?
I'd hate to get 2 loans just because of the fees, but also because I'm not ready to subdivide/build yet anyway.
Hi chad86tsi,
You have mentioned that you have two loans on the manufactured home. If you want you can refinance those two loans into a 30 year fixed mortgage. I don't think that will be a problem.
As far as the neighboring lot is concerned, you will have to first divide the lot into two parts. Then you can take a loan on anyone of it and pay off the mortgage that you have for the manufactured home. You cannot take a loan on the whole lot and then subdivide it. Once the manufactured home is free and clear, you can then shift it to the land on which you have taken the loan. After this, you can sell off the original land on which the manufactured home was situated.
"One lender told me that I could do that as long at I kept the loan to within 65% LTV on the resultant lot "
I did not understand this. Can you please explain it?
As far as partial release clause is concerned, if you divide the land into two parts and then take a loan on one of the 2 parts, then you will not require a partial release clause.
As far as construction loan is concerned, I guess you will be taking that in order to build your dream house. I think you will not face any problem is getting the construction loan but then you will have convert it into a mortgage later on.
Thanks,
Jerry
You have mentioned that you have two loans on the manufactured home. If you want you can refinance those two loans into a 30 year fixed mortgage. I don't think that will be a problem.
As far as the neighboring lot is concerned, you will have to first divide the lot into two parts. Then you can take a loan on anyone of it and pay off the mortgage that you have for the manufactured home. You cannot take a loan on the whole lot and then subdivide it. Once the manufactured home is free and clear, you can then shift it to the land on which you have taken the loan. After this, you can sell off the original land on which the manufactured home was situated.
"One lender told me that I could do that as long at I kept the loan to within 65% LTV on the resultant lot "
I did not understand this. Can you please explain it?
As far as partial release clause is concerned, if you divide the land into two parts and then take a loan on one of the 2 parts, then you will not require a partial release clause.
As far as construction loan is concerned, I guess you will be taking that in order to build your dream house. I think you will not face any problem is getting the construction loan but then you will have convert it into a mortgage later on.
Thanks,
Jerry
Thanks for taking the time to read this and posting a responce !
the problem lies in that I have one 1st and one 2nd on the whole thing (1 tax lot and the same lender on both loans). If I partition it, it becomes 2 lots under those loans, and my lender does not want to participate in that.
Perhaps I can do this anyway (without their express writen concent) as long as I make them lean holder. They only want standard bread&butter type "conforming" deals, no wierd stuff. I have not read the fine print to see if they are right to tell me no. I want to know I can, not just hope I can. They have said "no" so far.
The credit union lender said if they had the loan (If I refied with them), I could do this where the newly formed vacant lot was free and celar, as long as the LTV on their remaining colateral (the smaller lot with the existing house) was no more than 65%. His exact words were :
"As long as the bank were returned to the equity posistion it was in when the loan was origionated". < I can understand and respect this...
I can facilitate this with the proceeds of the sale on other lot I own (some day).
I can't sell this other lot now (bad market) so I cant' devide now, but I want the option too when I'm ready (in writing). I want this option in a new refi loan now so I can get the good rate now, and devide later
I'm going to have to get a construction loan in my future, don't know when but it is 100 % certain. My goal involves not having to refi -again- what I have now on the existing home to get to that loan. I wont' be ready for construction for a few more years and who knows what the rates will be like then. It won't do me any good to refi what I have now to 5%, only to have to refi it again in 3 years at 7% to facilitate this lot split and construction loan. Break even point is almost 4 years.
I want to refi the home I have now because the rates are good now, and we want the long term secuirty as part of our construction plans. I'd hate to loose the chance at 5% on this existing home just because I'm not ready to subdivide/build.
the problem lies in that I have one 1st and one 2nd on the whole thing (1 tax lot and the same lender on both loans). If I partition it, it becomes 2 lots under those loans, and my lender does not want to participate in that.
Perhaps I can do this anyway (without their express writen concent) as long as I make them lean holder. They only want standard bread&butter type "conforming" deals, no wierd stuff. I have not read the fine print to see if they are right to tell me no. I want to know I can, not just hope I can. They have said "no" so far.
The credit union lender said if they had the loan (If I refied with them), I could do this where the newly formed vacant lot was free and celar, as long as the LTV on their remaining colateral (the smaller lot with the existing house) was no more than 65%. His exact words were :
"As long as the bank were returned to the equity posistion it was in when the loan was origionated". < I can understand and respect this...
I can facilitate this with the proceeds of the sale on other lot I own (some day).
I can't sell this other lot now (bad market) so I cant' devide now, but I want the option too when I'm ready (in writing). I want this option in a new refi loan now so I can get the good rate now, and devide later
I'm going to have to get a construction loan in my future, don't know when but it is 100 % certain. My goal involves not having to refi -again- what I have now on the existing home to get to that loan. I wont' be ready for construction for a few more years and who knows what the rates will be like then. It won't do me any good to refi what I have now to 5%, only to have to refi it again in 3 years at 7% to facilitate this lot split and construction loan. Break even point is almost 4 years.
I want to refi the home I have now because the rates are good now, and we want the long term secuirty as part of our construction plans. I'd hate to loose the chance at 5% on this existing home just because I'm not ready to subdivide/build.
Hi chad86tsi
As far as I can understand from your previous post, you have two mortgages on the manufactured home but the neighboring lot that you have is free and clear. In that case, you will be able to subdivide the lot in two parts. If the lot has not been used as a collateral for any of the loans, then the lender cannot object to the division of the neighboring lot.
I think if you divide the land first and then try out for a loan, you won't face problems.
Thanks.
As far as I can understand from your previous post, you have two mortgages on the manufactured home but the neighboring lot that you have is free and clear. In that case, you will be able to subdivide the lot in two parts. If the lot has not been used as a collateral for any of the loans, then the lender cannot object to the division of the neighboring lot.
I think if you divide the land first and then try out for a loan, you won't face problems.
Thanks.
It's all one lot, and I want to subdevide it.
I may have confused the post with another lot I own outright a few blocks away that I plan to sell to facilitate the construction plans I have.
"I think if you divide the land first and then try out for a loan, you won't face problems."
So in your opinion, this is not a signifigant breech of the terms of the loan loan I have now? provided of course they retain their lein/mortgage rights over it?
I think probably not since I did a lot line adjustment earlier this year on this property (I added .71 acres to it from a neighbors lot) and they did not object. It added signifigant value to their colateral, and this subdevide would do the same (provided they had claim to both).
I had hopes of deviding it off and having no lean/mortgage on the newly formed lot, so when I want to begin constructon I won't have to modify/re-do the loan for the house and origional (reduced size) lot. <that may not be possible.
Have any of you heard of adding such "partial release clauses" to a conventional loan?
Thanks again for your time.
I may have confused the post with another lot I own outright a few blocks away that I plan to sell to facilitate the construction plans I have.
"I think if you divide the land first and then try out for a loan, you won't face problems."
So in your opinion, this is not a signifigant breech of the terms of the loan loan I have now? provided of course they retain their lein/mortgage rights over it?
I think probably not since I did a lot line adjustment earlier this year on this property (I added .71 acres to it from a neighbors lot) and they did not object. It added signifigant value to their colateral, and this subdevide would do the same (provided they had claim to both).
I had hopes of deviding it off and having no lean/mortgage on the newly formed lot, so when I want to begin constructon I won't have to modify/re-do the loan for the house and origional (reduced size) lot. <that may not be possible.
Have any of you heard of adding such "partial release clauses" to a conventional loan?
Thanks again for your time.
Hi chad86tsi,
If you have one lot and do not have a mortgage on it, then you can divide it without the permission of the lender. But if you have a mortgage on the lot that you want to sub-divide, then you will have to take the permission of the lender. There are chances that the lender will not be ready to subdivide the land as there is a mortgage on it.
As far as I can understand, you want to subdivide the land on which the manufactured home is situated. In that case, I don't think the lender will agree to it as you already have a loan on the property. As far as partial release clause is concerned, if it's not mentioned in your current mortgage docs, then you cannot avail the facility of this clause.
If you refinance the existing mortgage, then you can include the partial release clause in the mortgage provided your lender agrees to this. But I guess a partial release clause may complicate the whole thing.
Thanks,
Jerry
If you have one lot and do not have a mortgage on it, then you can divide it without the permission of the lender. But if you have a mortgage on the lot that you want to sub-divide, then you will have to take the permission of the lender. There are chances that the lender will not be ready to subdivide the land as there is a mortgage on it.
As far as I can understand, you want to subdivide the land on which the manufactured home is situated. In that case, I don't think the lender will agree to it as you already have a loan on the property. As far as partial release clause is concerned, if it's not mentioned in your current mortgage docs, then you cannot avail the facility of this clause.
If you refinance the existing mortgage, then you can include the partial release clause in the mortgage provided your lender agrees to this. But I guess a partial release clause may complicate the whole thing.
Thanks,
Jerry
Thanks Jerry, I don't doubt it will complicate the process but I had to ask.
"As far as I can understand, you want to subdivide the land on which the manufactured home is situated. In that case, I don't think the lender will agree to it as you already have a loan on the property. As far as partial release clause is concerned, if it's not mentioned in your current mortgage docs, then you cannot avail the facility of this clause. "
This is a correct summary of my situation. I just don't want to repeat it with the re-fi loan if it can be helped.
Is this something that will prevent me from access to good rates, or just limit the number of lenders that will work with me (and perhaps add a little to closing costs)?
I should go pay a visit to that credit union loan officer again. He told me they are a small opperatin and he was a VP (I think they have 3 branches), and did his own underwriting so I'm pretty sure whatever he tells me, is how it will be at that bank. I've had bad experiances with brokers making claims the underwriter was not willing to stand behind. I understand that is how it works, but sometimes you just want to talk to the underwriter directly.
If you have any suggestions on where I should go from here, I'm pretty open to ideas.
thanks for your time !
"As far as I can understand, you want to subdivide the land on which the manufactured home is situated. In that case, I don't think the lender will agree to it as you already have a loan on the property. As far as partial release clause is concerned, if it's not mentioned in your current mortgage docs, then you cannot avail the facility of this clause. "
This is a correct summary of my situation. I just don't want to repeat it with the re-fi loan if it can be helped.
Is this something that will prevent me from access to good rates, or just limit the number of lenders that will work with me (and perhaps add a little to closing costs)?
I should go pay a visit to that credit union loan officer again. He told me they are a small opperatin and he was a VP (I think they have 3 branches), and did his own underwriting so I'm pretty sure whatever he tells me, is how it will be at that bank. I've had bad experiances with brokers making claims the underwriter was not willing to stand behind. I understand that is how it works, but sometimes you just want to talk to the underwriter directly.
If you have any suggestions on where I should go from here, I'm pretty open to ideas.
thanks for your time !
Hi chad86tsi,
As far as I can understand your situation, if you want to add a partial release clause in your mortgage docs, you will have to refinance the loan. Otherwise, you won't be able to add a new clause to the doc. I don't think a partial release clause will affect the rates while you refinance.
Yes, you can consult the credit union loan officer and check out the rates and terms available with them. You can also speak to the lenders of this community and seek a no-obligation free mortgage consultation. This will also help you to get a fair idea about the market rates and conditions.
Wish you a Merry Christmas.
Thanks
As far as I can understand your situation, if you want to add a partial release clause in your mortgage docs, you will have to refinance the loan. Otherwise, you won't be able to add a new clause to the doc. I don't think a partial release clause will affect the rates while you refinance.
Yes, you can consult the credit union loan officer and check out the rates and terms available with them. You can also speak to the lenders of this community and seek a no-obligation free mortgage consultation. This will also help you to get a fair idea about the market rates and conditions.
Wish you a Merry Christmas.
Thanks