Mortage loan question

Trying to refinance a rental property I have in order to build a new house myself and beat the new federal regulation, that state I need a GC to build it for me. I have built a house before, so I'm not worried about how to build a house. So I went to one of my banks and right off the bat they wouldn't refinance a rental house although they would loan to me to buy one. So I went to my regular bank whom turned me down on extending a HEL(2 years ago) I had to buy the property I'm going to build on. As stated they denied me due to debt to income ratios...supposedly. I worked it out and bought that property. Sold my house and paid the HEL(land) off with intentions of building on it. On march 29 I applied for a loan on a rental property I have..its free and clear. Perfect rental history for 3 years. The bank said they would loan 65% of appraised value with good credit scores and good debt to income ratios at 4.86 APR...credit scores came in at 802 and debt to income ratio is less than 20%. He said 43% was max. So in my eyes...everything is perfect. Even he said there is no reason this loan wont go through. Now with that said...a week ago Friday the loan officer needed me to come in and fill out another loan application because my first one was running out. He said new federal regulations state a application runs out in 20 days. I wasn't happy about it but I followed suit because he said he would have me a answer that evening or at latest..last Monday. He also said they wouldn't run my credit again. This was my main concern because...hell if they cant make up there minds in 20 days in my case...no use in hurting my credit score on a bank that wont loan to me. Feel like I'm getting the run around here...same feeling I had when I was denied earlier. I been with this bank for over 20 years. I'm getting aggrevated because they haven't gave me a answer on this loan...nothing. I don't need the loan to get started but I need a commitment for when I do need it. So how long does it take when everything is in line? Are they wasting my time like I feel like they doing?


I'm going to make a decision tomorrow if they cant because everything I have read suggest the underwriters can approve this in a couple days at latest. Looking back I think they denied the loan and he wanted to re-submit a new one without telling me, so he didn't loose his commission.

Sounds pretty shady to me.......never taken more than 3-5 days in my experience. Big Bank or Credit Union?

Hate to get off topic, but what are these new regulations about needing a GC to build your own home?

The banks wont loan to you if you don't hire a GC. Some of those new federal regulations to protect us folks who don't need protection. I have came to the conclusion anytime the government wants to protect us...just bend over and take it. I'm not over that hurdle just yet...there will be more issues when I go to pull a building permit with the county. I just don't like big brother telling me how to spend my money in the name of protection.

On the bright side...I got my answer today. Underwriters approved it the Friday I signed(loan officer just forgot to call me) and now we waiting on the appraisal which I'm not worried about. I still don't think it should of taken this long to get a answer...not with my record.

This was through 5th 3rd bank.

A few banks will still loan without a GC.

FireStalker said:

Hate to get off topic, but what are these new regulations about needing a GC to build your own home?

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You don't need a GC if you've got the cash...but a bank is gonna want a GC in nearly every case.

Ok, that was what I already understood. I can understand a bank wanting to require a GC to protect itself, but I misunderstood you and thought that it would be illegal to build a home yourself without a GC license.

Best of luck finding your answers and getting it all worked out.

catfishrus said:

The banks wont loan to you if you don't hire a GC. Some of those new federal regulations to protect us folks who don't need protection. I have came to the conclusion anytime the government wants to protect us...just bend over and take it. I'm not over that hurdle just yet...there will be more issues when I go to pull a building permit with the county. I just don't like big brother telling me how to spend my money in the name of protection.

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Is it the bank or is it really Federal Regs? Reason I ask is that I know a lot of times banks (and car dealers and anyone else) will claim "Regulations" when in reality its just how they CYA. I know the finance managers at a dealership I worked at would claim they had to run credit checks to check the buyer against the importer or terrorist ban list, when in reality they checked credit to make sure that the person they were accepting a personal check for $30K from wasn't someone with 14 years of chargeoffs and judgements against them.

I can see the bank making a policy that said they won't make construction loans without a GC license.

JONOV said:

Is it the bank or is it really Federal Regs? Reason I ask is that I know a lot of times banks (and car dealers and anyone else) will claim "Regulations" when in reality its just how they CYA. I know the finance managers at a dealership I worked at would claim they had to run credit checks to check the buyer against the importer or terrorist ban list, when in reality they checked credit to make sure that the person they were accepting a personal check for $30K from wasn't someone with 14 years of chargeoffs and judgements against them.

I can see the bank making a policy that said they won't make construction loans without a GC license.

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I don't know...I been told by two different banks it was federal regulations now.

What blows my mind is I could of walked in a new car dealership and bought a new car for the same amount I'm borrowing on this rental and walked out with a loan and a new car....same day. When I drive that new car off the lot...I lost at least 10%. With this rental house..they only willing to loan 65% of the value and it wont lose a dime when I walk out of the bank with a loan .....yet it takes along time to make a loan happen. I don't understand it.

catfishrus said:

I don't know...I been told by two different banks it was federal regulations now.

What blows my mind is I could of walked in a new car dealership and bought a new car for the same amount I'm borrowing on this rental and walked out with a loan and a new car....same day. When I drive that new car off the lot...I lost at least 10%. With this rental house..they only willing to loan 65% of the value and it wont lose a dime when I walk out of the bank with a loan .....yet it takes along time to make a loan happen. I don't understand it.

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It's crazy, I agree, and you could borrow 120% of the value of the car, you could roll negative equity into it, crazy.

I think it has to do with the process to get the collateral back, myself. I think that because they can repo a car without too much legal fuss, but foreclosing is a much harder deal.