Re: Construction Loan Financing
From: Denise Meier (
Date: Fri, 19 Feb 1999 11:25:12 -0600

On Fri, 19 Feb 1999, Rich Lobdill wrote:

> Denise Meier wrote:
> they required 20% of the APPRAISED value of the project, which was
> considerably less than the COST of the project. We each (except for the
> two subsidized low-income units) ended up putting in 35% of our projected 
> purchase price, plus paying for upgrades and change orders in cash.
> Denise: I hope you meant "... which was considerably *more* than the
> COST of the project...".
> If your project appraised for a lot less than the cost, the permanent
> financing (or 'take out' loans) for each house would only cover a
> portion of appraised value and you would have to have a significant
> cash down payment. Could be done, but would not bode well for resale
> values.

Nope, I said exactly what i meant. Most of us expect to have to leave in a
higher down payment in order to get a loan. We are hoping to have much
better appraisals done for the take out financing (we really go screwed by
the construction loan appraisal and even the bank was dissatisfied with
the appraiser, though not enough to invalidate the appraisal) . However,
we don't expect the appraisals to reach the actual cost of the houses.

Denise Meier
Two Acre Wood
Sebastopol, Sonoma County
Northern California

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