|Posted by: scott smith Oct 8 2004, 11:54 AM
| I have purchased a property with an existing 1945 construction house on it. At the time of purchase (2002), I was able to swing a conventional mortgage even though the mortgage company would only consider the value of the home (which they inflated) and not the land. I accomplished this by agreeing to a higher rate. Now I have paid my mortgage down to 110k from 185k, and I want to look at my options for refinancing. I have had much trouble with insuring the property due to the low value of the house. Since my plan is to knock down the house in 4 yrs and build new, I am wondering if I could get a lot loan on the land (which is appraised for more than my mortgage balance) even though there is a house on the lot? I would also like to amortize for a full 30 yrs if possible?
|Posted by: loanuniverse Oct 8 2004, 08:03 PM
Do you have an appraised value for the house and the land? Frankly, your situation is a bit confusing, as I am not familiar with land financing at the personal level. On the one hand, I would guess that the appraised value of the property with the improvements would govern any kind of financing. In other words, the house value will determine how much you can borrow. On the other hand, I can see an appraiser taking a look at the parcel and if the house is really worthless then just give a value of the land.
It reminds me of this loan I underwrote for a developer a couple of years ago where the appraiser just gave me the value of the land since it was worth much more as a place to build a condominium building than the strip shopping center that was there.
Now amortizing is not the same as maturity, which means that you probably can get a loan with an amortization of thirty years, but it will probably carry a balloon payment. There is very little chance that you will get someone to lend on land with a thirty-year maturity.
The big question in your situation is whether or not the value of the land is over $110,000. If it is not, and the house does not add any value then you have negative equity.
Sorry, I could not provide specific feedback, but my forte is commercial loans.