Dilemma--appraiser can't value unfinished house--now what?

I have a house on acreage under contract; I’m qualified, and closing on July 30. My dilemma is that the house needs several (not all) doors, floors and kitchen cabinets. It was built in 2001, is very nice but almost complete. The appraiser visited the property and stated she cannot appraise it because it needs doors, floors and cabinets. Broker called and said either the seller or me needed to finish the house prior to closing, offering to extend my rate lock for 30 days. A second option is a rehab loan but at 8%, which is exorbitant, money goes into an escrow account, we close on time, but I refuse to do that. Refinancing would be an additional cost of course. When the contract was written, $8000 was written into it for finishing the house, but I can’t get to that before closing. Owner said he didn’t want to finish it. So, here’s the dilemma…I have cash sufficient for closing and approved loan at 6.6%, but not enough additional cash to finish everything and still pay for closing. Also, I don’t want to finish his house without a contract protecting me from loss, that would be stupid. We all know buyers should not make major purchases on credit cards before closing because this changes their financial picture and may cause the loan to be rejected. What do ya’ll recommend? I am in Austin, the house is in Milam County. Please Help! All suggestions are greatly appreciate!!! :banghead Quickstudy

Talk to your lender and see if they will allow you to escrow the money to finish the house. That way the lender knows the money is there to finish the house after closing. Also, I agree that you would be a fool to finish someone else’s house.

Yes, I did that. They are willing but interest rates jump from 6.6 to 8 per cent as I stated. I am approved but the house is not. I would like to fix the house with a contract protecting my investment if possible. Any thoughts on how to go about doing this?

Your broker is scamming you. There is no reason that your rate would jump like that because you were escrowing for cabinets, and flooring. You might want to look around for someone else to help you. Are you putting money down?

Yes, I’m putting down 5%, doing an 80-15-5. There is another company who will finance for 5% down but won’t do 80-15-5 for me. You’re right, the big jump in interest rates is the problem for me. I hesitated shopping for other lenders for many require 20% down on acreage, but you may also be correct that I’m being scammed; I believe I caught him in a lie yesterday!

Just based on the information that you have posted I would have to agree with Christopher. You need to get a second and maybe a third opinion on this. DO NOT allow the others to start pulling your credit. This could cause problems as your score may drop and effect your program, rate, etc. should you not be able to close quickly.

Just outline your scenario and a good loan officer will be able to get you some quality information.

Thanks for your input, Mark. I am following your advice and shopping once again for lenders. I, too, was suspicious of the extreme jump in rates. Perhaps they prefer not servicing such loans, and do this to narrow their field.

Would a HML be a good idea here???

I agree with Christopher and Mark. Definately time to shop. Mark is right about the credit pulls as well. Ask your current broker what score he pulled, use that and the rest of the scenario and any good LO can get you fairly accurate quotes. If the broker won’t tell you the score then they are hiding something and you might want to go elsewhere. It’s cutting it close but if you have eveything needed you should still be able to close on time.

If you balk at 8% you might flip when you see a HML rate and points. Doesn’t sound like its for you.

Is a subject-to appraisal out of the question for the lender?

Why can’t the appraiser value the house? That is a crock of crap. An appraiser can ALWAYS put a value on a property. Now it may not be worth what you want to borrow on it but it has value. Find another lender and definitely find another appraiser.


Quickstudy, if your broker is offering you a 95%loan to cost rehab loan at 8% and this is as non-owner and going Stated, than that is not a bad rate for rehab to perm loan, which it sounds like that’s the type of loan he is offering you. That’s all I pretty much do is these construction-perm or rehab-perm loans so believe me he is right in the ballpark.

Getting a lender to do an escrow holdback on a conventional loan and getting the lower rate in the 6’s is not likely as these holdbacks are generally for weather related items which obviously doors, floors and cabinets would not fit under.

Also Find a new appraiser.