Construction Loans using nonstandard meathods like Steel SIPS SCIP ICF and suspended concrete floors
Last Post 02 Dec 2014 11:45 AM by Pokletu. 15 Replies.
Printer Friendly
Sort:
PrevPrev NextNext
You are not authorized to post a reply.
Author Messages
newbostonconstUser is Online
Advanced Member
Advanced Member
Send Private Message
Posts:735

--
30 Oct 2014 10:30 AM
Would like to hear experiences people have had applying for construction loans when using not so main stream building methods. Also, I know you have to disclose all the methods you are going to use with quotes, but has anyone ever changed from stick to sips mid stream and had problems with the bank? Thanks in advance.
"Never argue with an idiot. They will only bring you down to their level and beat you with experience." George Carlins
SurfsupUser is Offline
Basic Member
Basic Member
Send Private Message
Posts:349

--
31 Oct 2014 09:09 AM
Most banks don't offer construction loans anymore. Then there is the situation on insurance. It took me 8 months to get a bank and insurer (bank required the insurance proof as well). I had to sit down with the bankers and explain in detail the home so they knew I knew what I was talking about and wouldn't fail miserably losing all their money. Interview after interview with this person, then their boss and their bosses boss. The housing crash has scared the begeezus out of everyone. I was very fortunate to have a banker that understood and agreed to loan me money after they put me through the paces. Very lucky! Many wouldn't, even though I built a home before. For materials the bank didn't care. It is the inspectors office and village that cares about this. If they never heard of what you're doing - well...good luck wtih that. What a pain. I tried to get ICFs, low voltage lighting, etc "approved" here and finally gave up. When going into code issues with new products this is a whole new ballgame. Meetings, OEM reps, zillions of phone calls and brown stuff up to your ears. If you have a job and are building your home on the side (like me), well...maybe your area will be better.
greentreeUser is Offline
Advanced Member
Advanced Member
Send Private Message
Posts:587

--
01 Nov 2014 10:22 AM
I wouldn't call sips or icf products nonstandard and therefore not an issue, the issue would be getting the premium for those products to fit in the appraisal for the amount you are asking. Solution is pay more out of pocket, or build below your means.

Also you don't necessarily need actual quotes, just show a reasonable breakdown with named subcontractors, which allows you to make it appear that the amount you are asking will complete the house which will get the bank to approve the loan even though you will actually end up paying out of pocket to finish the building. Numbers game.

Banks I've worked with care only about numbers on paper and how they relate to the plan appraisal. Their draw inspections are a joke and very manipulative and are aesthetic, not code. If you are making changes during construction they will have no idea.

Thats from my experience.
LbearUser is Offline
Veteran Member
Veteran Member
Send Private Message
Posts:2740
Avatar

--
01 Nov 2014 07:39 PM
The 2012 IBC and IRC recognize and have sections on ICFs and SIPs. The manufacturers have spent the time and money to get their products code recognized and approved. When you get into SCIPs and other similar types of rare building methods, you are on your own and you will need deeper pockets and a lot of patience. If it's not recognized by the 2012 IBC/IRC, good luck on getting it built because you will face the challenge of your lifetime. Banks are one issue but local code inspection is a whole other hurdle to get through.

I would try local credit unions to get a construction loan. Maybe the big banks have stopped or reduced the construction loans but local banks and credit unions have and do construction loans. Usually 30% cash down payment is needed on the total loan amount. So if your house will cost $400k to build, you will need $120k cash before the bank loans you the other $280k and they will slowly disperse the funds as the construction progresses. They will need to see contracts and you must stay within budget.




newbostonconstUser is Online
Advanced Member
Advanced Member
Send Private Message
Posts:735

--
01 Nov 2014 09:33 PM
Thanks guys...great insight...

Sounds like I should go over plans with inspector first...
"Never argue with an idiot. They will only bring you down to their level and beat you with experience." George Carlins
SkyHeatingUser is Offline
Basic Member
Basic Member
Send Private Message
Posts:203
Avatar

--
01 Nov 2014 10:07 PM
The next issue with be the appraiser. My appraiser said no increased value over that of an Air Conditioner($2,000 value) for having a ground source heat pump due to... extra noise and maintenance and lack of longevity...
Yeah, because ground source heat pumps are louder than ACs.... THERE IS NO OUTSIDE NOISE with geo.
Maintenance, lots less with a package unit with a 10 year parts and labor warranty vs an AC system with 1 year labor and 5 year parts.
Longevity 24.7 years of geo vs 15 of standard AC systems.

Good luck finding an appraiser that will understand the value of what you are doing so the bank will approve the loan.
Visit my Youtube channel for product reviews and customer testimonials http://www.youtube.com/user/skyheating1
http://www.welserver.com/WEL0626/
JellyUser is Offline
Veteran Member
Veteran Member
Send Private Message
Posts:1017

--
02 Nov 2014 10:32 AM
Posted By newbostonconst on 01 Nov 2014 09:33 PM
Thanks guys...great insight...

Sounds like I should go over plans with inspector first...
I'm not sure if that's a good idea either, because it's just asking for complications. Rather, submit the plans for approval to the department, and upon approval proceed according to said plans. The inspector may have questions along the way, and that's when you can refer him to the engineering. That's why you need to stick to the drawings, and make sure the drawings have good details of crucial structural concepts.

rlsmith017User is Offline
New Member
New Member
Send Private Message
Posts:35

--
11 Nov 2014 12:38 PM
I started work last week on a SCIPS house in north Georgia. I am lucky in that there are still local banks doing residential construction loans. My issue with the bank, in a nutshell: there are no comparable houses in the area. Local building practices are still based on doing the code minimum for insulation and air sealing. The bank's underwriters seem to feel that investment in quality windows, insulation, etc. is wasted money. You need to budget more time and don't expect the usual 20% down rules to apply. Might not be a bad idea to get a baseline EKG and increase the blood pressure meds as well ;)
Roger
jonrUser is Offline
Senior Member
Senior Member
Send Private Message
Posts:5341

--
11 Nov 2014 05:29 PM
The bank's underwriters seem to feel that investment in quality windows, insulation, etc. is wasted money.


Unfortunately, to a large extent, so will most buyers. Resale value of green improvements is a problem.
cmkavalaUser is Offline
Veteran Member
Veteran Member
Send Private Message
Posts:4324
Avatar

--
11 Nov 2014 05:42 PM
Posted By jonr on 11 Nov 2014 05:29 PM
The bank's underwriters seem to feel that investment in quality windows, insulation, etc. is wasted money.


Unfortunately, to a large extent, so will most buyers. Resale value of green improvements is a problem.



Energystar has an appraiser's handbook to increase house value based on energystar certified homes
Chris Kavala<br>[email protected]<br>1-877-321-SIPS<br />
richmUser is Offline
Basic Member
Basic Member
Send Private Message
Posts:107

--
12 Nov 2014 10:53 PM
Found this with a simple Google search

www.appraisalinstitute.org/assets/1/7/AI_820_04

Lots more info on that site

RichM
SurfsupUser is Offline
Basic Member
Basic Member
Send Private Message
Posts:349

--
13 Nov 2014 08:46 AM
Posted By greentree on 01 Nov 2014 10:22 AM
If you are making changes during construction they will have no idea.


Yea well the bank requires a set of stamped plans. Good luck to someone that makes changes afterward - which also require new reviews - and doesn't update the bank and gets caught.
KayOUser is Offline
New Member
New Member
Send Private Message
Posts:2

--
22 Nov 2014 03:15 PM
One thing to bear in mind, the banks don't care about anything that doesn't increase their bottom line. If the perceived value of the building isn't going to be positively affected by energy efficiency installations you plan to implement then they probably won't fund it.
SurfsupUser is Offline
Basic Member
Basic Member
Send Private Message
Posts:349

--
23 Nov 2014 06:08 PM
KayO I'd rephrase that as "if the banks don't see an OVERALL value of the home when it is time to sell as more than the overall cost to build, they won't fund it."

In other words, you better be able to sell it for more than you paid to build it, or the bank will tell you to take a hike.
cmkavalaUser is Offline
Veteran Member
Veteran Member
Send Private Message
Posts:4324
Avatar

--
23 Nov 2014 06:23 PM
Homeowner will need to fund extra out of pocket
Chris Kavala<br>[email protected]<br>1-877-321-SIPS<br />
PokletuUser is Offline
New Member
New Member
Send Private Message
Posts:15

--
02 Dec 2014 11:45 AM
How 'bout a personal loan?
You are not authorized to post a reply.

Active Forums 4.1
Membership Membership: Latest New User Latest: janvin New Today New Today: 0 New Yesterday New Yesterday: 0 User Count Overall: 34705
People Online People Online: Visitors Visitors: 166 Members Members: 1 Total Total: 167
Copyright 2011 by BuildCentral, Inc.   Terms Of Use  Privacy Statement