Comments on: Mortgage Shopping

By: Ron Jones

Ron Jones — Thu, 04 Jun 2009 14:26:32 +0000

This was a great help to me so thanks for the advice!

By: 1BadBoy

1BadBoy — Tue, 03 Feb 2009 23:55:18 +0000

Hi Mike. I’ve been reluctant to call Wells Fargo as I wasn’t sure what their reaction would be, and I don’t have a mortgage guy with them. We have our loan with Wells Fargo, but it was handled by a broker. I did ask the broker when we got our loan about doing “major” remodeling (I said we might go down to the foundation, but I did not say we would remove it), and through the broker’s interaction with Wells Fargo I was told that it would not be a problem. However, I still wonder. But since we are at the same institution, I am thinking it could be okay. Maybe I’ll make a call to Wells Fargo’s loan department to ask the question without providing my name, but I’m not sure if that would do much good, though it might ease my consious :-). I’m not sure this would be appropriate, but could you share your Wells Fargo’s mortgage guy’s name and number (though probably not through this comment method)? I still would not want to share my name, but maybe he could explain their loan provisions regarding remodeling/demo construction.

By: Mike D.

Mike D. — Tue, 03 Feb 2009 22:52:38 +0000

1BadBoy: Ok, yes, I’m in a similar situation and I wondering the same thing, so I called my mortgage guy at Wells Fargo (where my loan is) and asked him that exact question. In other words, am I *allowed* to demolish my house considering that the bank technically owns it? He said “yep, no problem”… but I would *definitely* make sure your bank feels the same way before doing anything.

By: 1BadBoy

1BadBoy — Tue, 03 Feb 2009 22:41:32 +0000

Hi Mike. The reason I ask is that my wife and I, as I mentioned in my earlier post, are near the beginning of a new home construction project. I *think* we have enough money to complete the project, but based on all things I’ve read, we will most likely be a bit short (maybe not). There are some areas we can cut back on or even leave unfinished initially (e.g. basement) if needed. But my dilemma is that we currently have a loan on our home. Our project calls for complete demolition of the building and garage before building the new home with garage (foundation and all as it is more than 80 years old). Plus the orientation of our home when built is perpendicular to the street in front of our house and we are changing that so the house is parallel to the street. I’ve also been told that home loans have provisions to “not diminish the value of the home”. With that in mind, our project will ultimately “increase” the value of our home. But it’s the process in the middle (house gets demo’d *before* new structure gets put in place) that concerns me. I had one refinance guy at Countrywide tell me that his view is that we are increasing the value, so he didn’t think it was an issue at all. I also had a neighbor (general contractor) tell me that he thought that would put us at odds with the bank and they *might* call our loan (I guess if they find out). But I [over] think most things, so I have wondered about this a lot. After reading your initial post above makes me think you currently have a loan on your home too (maybe I’m wrong about this). I wondered if you had more information about this topic that you could share. I know your situation is a bit different than mine in that you are retaining your foundation, and maybe that makes a difference – we cannot do that.

By: Mike D.

Mike D. — Tue, 03 Feb 2009 00:48:41 +0000

1badboy: I’m not getting a construction loan, mainly because they are much more of a hassle. You need to document everything you are going to spend money on and then the bank doles out funds step-by-step along the way. If I had to get a construction loan, I would, but since I don’t, I’m not going to. Also, not sure about the specifics of demolition with such a loan, but I know you can do it.

By: 1BadBoy

1BadBoy — Tue, 03 Feb 2009 00:39:23 +0000

I thought you must get a “Construction” loan. Will they allow your home to be demolished and then rebuilt with that loan? I guess I’m not up on all this, though my wife and I are moving forward with a new building ourselves. Our builder has talked about tracking the expenses we have already spent (e.g. design, permits, reviews, etc.) so that this information is used with a construction loan.

Are you using a construction loan? If not, how can you do that?

By: Joe Hrach

Joe Hrach — Sat, 06 Sep 2008 17:24:47 +0000

I went to M&I and applied for a construction loan so that I can track all the expenses with building my new house. The have great rates and will roll the construction loan into a permanent loan without incurring any additional fees. Their quoted rate was prime -.25% for a 5/1 arm.