Here's the situation. I call upon the combined power of TexAgs to see if there is an answer.
My wife and I have lived in our current house about 6 years. We love our lot and the neighborhood, but the house is showing its age. After looking at renovations of a 70-year old house, we compared to cost of construction, and decided to demo and re-build on our lot. I know, I know, it's some expensive dirt, but we really like the area.
We found a builder, tweaked the design, and executed a contract. We applied for a one-time construction loan with a lender, and all was looking well until earlier this afternoon.
Our current mortgage is a refinance we did to get the rate down from 4.875% to 3.6%. The lender did not realize it was a cash out refinance, and according to him, that kills any construction loan because some portion of the mortgage is a home equity loan, which can be harder on the bank. Options may be
(1) pay off current mortgage with cash or loan secured by anything other than the current house. Not possible or at least, very impractical or unfeasible.
(2) sell home to builder with agreement that they will sell it back to us. Not sure what my comfort level with that is.
(3) sell house and buy a different lot. Don't really want to go through this, not just because we like the current lot and pool, but we also want to avoid the fix up/show/sell/etc. process involved.
(4) ????
Anyone else ever run across this? At least one banker has told me that once there is any hint of a home equity loan, construction loan cannot be done, even if we paid back the cash out portion of the refinance (which we could do).
Thanks, I'll hang up and listen.
My wife and I have lived in our current house about 6 years. We love our lot and the neighborhood, but the house is showing its age. After looking at renovations of a 70-year old house, we compared to cost of construction, and decided to demo and re-build on our lot. I know, I know, it's some expensive dirt, but we really like the area.
We found a builder, tweaked the design, and executed a contract. We applied for a one-time construction loan with a lender, and all was looking well until earlier this afternoon.
Our current mortgage is a refinance we did to get the rate down from 4.875% to 3.6%. The lender did not realize it was a cash out refinance, and according to him, that kills any construction loan because some portion of the mortgage is a home equity loan, which can be harder on the bank. Options may be
(1) pay off current mortgage with cash or loan secured by anything other than the current house. Not possible or at least, very impractical or unfeasible.
(2) sell home to builder with agreement that they will sell it back to us. Not sure what my comfort level with that is.
(3) sell house and buy a different lot. Don't really want to go through this, not just because we like the current lot and pool, but we also want to avoid the fix up/show/sell/etc. process involved.
(4) ????
Anyone else ever run across this? At least one banker has told me that once there is any hint of a home equity loan, construction loan cannot be done, even if we paid back the cash out portion of the refinance (which we could do).
Thanks, I'll hang up and listen.