I am a homeowner with a separate piece of land, where I want to build a 4,000-square-foot earth-sheltered house. I plan to use the Minnesota company, Earth Sheltered Technologies (http://www.earthshelteredtech.com), for the shell. All the rest of the work will be locally contracted.
I qualify for construction loans, no problem. However, when all is said and done, there will be a $200k mortgage I need to convert to conventional. My problem is that no conventional lenders want to carry that note. They all say they have no way to comp such a structure. I could use private funding, but today’s interest rates are not reflected as well in that market.
Does anyone have any experience with obtaining conventional mortgages for unconventional structures? Any advice would be appreciated!
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As a builder, I've gone through it with a large geodesic dome "kit" and am currently getting ready to begin construction of a log home. The Bank the HO's are going through is Washington Mutual, which has been a bit of a pain to deal with for the homeowners but has been very good to deal with as a builder.
Now I'm not promoting WM, just laying some groundwork.
On both structures (dome and log home) there was initially some reluctance by the bank to commit for the very reasons you state...no comparative structures to establish a market appraisal.
In the case of the geo dome, the owners had to settle for a construction loan that was about 70 % of what they qualified for had they borrowed for a conventional structure. As a result, they had to pony up more of their own money to make up the difference.
In the case of the log home, we were able to find a comp structure by the same manufacturer within about 70 miles, and, while the loan hasn't closed yet, it has been approved at a conventional value, in part because the log kit supplier (Khun Bros Log homes has been around for a while and was able to provide some data from other markets that reassured the bank.
So, from my limited experience, I would think you should probably prepare yourself for a reduced loan value, or get Earth Sheltered Technologies to assist you.
Hope this helps.
Hey guy! Can I tear you away from the gambling discussion for a minute?...you probably have more experience with this issue than me... :-)
Hey there notch! I keep away from gambling be/c I always lose my shirt. Or as is the case of my recent loser bet with Gabe, I acquired a shirt I didn't want--pictures to follow!
Financing. We're finally rounding the corner, and I gotta tell you, it's a relief. As an industry niche, we've worked hard to find a reputable bank willing to take on thin-shell concrete domes. Finally have done it. Wells Fargo handles these domes nationally through a single office, and that office can address comps on a national basis somehow. They don't have the same restrictions of needing comps in a 70 mi radius, etc. They are also imposing strict guidelines on the construction--professionally drawn and engineered plans, surveys, licensed contractors, etc--and that is only for the good. Now that they've committed, some other banks are following along--monkey see, monkey do--and I just had the first case where two institutions competed for a client's mortgage! Also have other more conservative banks willing to do home equity on them once they're able to be appraised, but that takes the client being able to fund construction, which eliminates a lot. The people who established this spent years on it, and it's now paying off--I'm just now seeing the first clients signing contracts, and I know these people couldn't do it without the loan. Feels good to be a bit more mainstream!
Congrats! I'm sure you've been instrumental in bringing that all about.
After some poor experiences with alternative homes (often owner built) in the 70's, followed by the S & L fiasco of the 80's, it's no wonder that banks in general really tightened up.
It's encouraging that some responsible people (like you, of course) have demonstrated that quality, safety, livibility, desireability (marketability) and beauty can be incorporated into an alternative structure.
To the original poster, you don't mention where you are (a big help on this forum), but you might (if you haven't already) try doing some searches and contacts with a variety of alternative building suppliers (Yurts, Rammed Earth, etc.), or research some of those magazine articles about people who have converted to homes airplanes, barn silos, water towers and the like.
I'm just shooting from the hip here, but doggedness/perseverence might get you to where you want to go.
Thanks for your info!
We want to build the earth-sheltered house in Oakhurst, just south of Yosemite National Park and north of Fresno, CA.
Do either of you have contact info for the WFB or WM people handling the national programs?
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My contract with Washington Mutual Bank lists their address as :
1201 Third Ave.
Seattle, Washington 98101
But when they vetted MY background I was dealing with their LA office.
They probably have a Website....I'm too lazy tonight to take a look...
And I would bet they have a branch near your location...
I had some good times in Yosemite....back in the 60's...in those days you could car-camp in the Valley...used to watch the firefall at night from the Curry Company grounds. It's a REAL treat to go into Yosemite Valley in the winter or Spring....few people and absolutely stunning scenery.
Hiked into the upper valley and beyond several times. Yosemite is truly one of the most beautiful places on Earth!
Try http://www.wamu.com