How to get a mortgage when the appraisal says too much value is in the land?
Asked by
evander (
465
)
January 26th, 2010
We are trying to buy a house that has 11 acres of land, which we hope to do some farming on. We do not have much cash to put down, and the underwriters denied our mortgage because according to their standards, too much value is in the land. The appraisal came in at $210,000, but it put the value of the home at around $105,000 and the value of the land at $105,000. Apparently an acceptable home to land ration is 75/25 on a conventional loan. We have the house under contract at the price of $179,000, so we think we are getting a great deal but we can’t get the money. Creative ideas? No, we have no rich relatives.
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6 Answers
Hire another really nice appraiser? I know it sounds silly.. but maybe given an idea of what your looking for in the appraisal….
You can look into getting an agricultural loan or land loan. But typically, in my experience, these are balloon loans where your monthly payment is the same as though it were a 30-year mortgage w/ interest rate for the term of the loan and the balance is due at the end of a 3 year period. At that point you could try to refinance into a more standard mortgage.
You could also look into FHA loans.
@___ most lenders no longer can control who the appraiser is. Look up HVCC + appraisal.
I agree with @kevbo . I haven’t originated any loans of this nature, but I’ve heard a lot about this program.
Conventional loans are typically not going to allow more than 10 acres unless it’s common for the area & do not allow any commercial activities.
Usualy you can request another appraisal be done by the bank if you are disputing the results. But I think you wont have the choice of who does it. We hit a similar problem where there was about a 60k difference, we didnt have the cash and approached a different bank that gave us a HELOC to cover the difference.
How anxious is the owner to sell? Are they able to finance the property for a short term with a balloon payment in say 5 years. Or could they do a rental arrangement with part of each months rent counting as a part of the downpayment for 5 years? Its not as good for you as a deed and mortgage, but it gets you in the door. Most lenders are pretty conservative right now. Another option might to look for a very small community bank or a credit union.
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