Have construction loan ready to mature, house will not appraise at original value. Please help us.?

took out loan 1 yr ago. House is almost complete. Bank said that house will not appraise. What options do we have? All of our money is in the construction. Is anyone in this same situation? This is our first and only home, We are not investors. Please help us.

Talk to your loan originator and find out what the bank will require of you in terms of financial input on your part. Get specifics and try to negotiate. Also get a copy of the appraisal and talk to the appraiser.

We had a similar situation. The original appraisal for our construction loan (one-time close) was for a higher amount which would have made our payment at an 80% LTV so we would not have to pay mortgage insurance. The underwriter demanded a new appraisal so our loan is now at 92% of the appraised value. So when our construction loan converted to a regular mortgage, our monthly payment was higher because we now have to pay mortgage insurance (mortgage insurance is usually required if the loan to appraised value--LTV--is less than 80%). I spoke with our appraiser and he told me that if our property were to be appraised when we converted to a regular mortgage rather than at the time we were granted the construction loan, it would appraise for even less because of declining values in our area. In addition, we have a guest house which was not counted in the appraisal and which we had paid for because none of the comparable properties had a guest house.

If you have the type of construction loan where there is a new appraisal when the home is finished and now you will be closing on the finished home, you are at the mercy of the comparable properties that the appraiser was able to find. Talk to the appraiser to see if there are other comparable properties that he can use to establish a value for your property which might be higher based on construction values and amenities in the home.

Normally appraisers use similar properties which have sold in the past 6 months to determine value. Go look at the comparable properties (at least a "drive-by" and knock on the door to see the homes). If values have been declining in your area, as has been happening in other parts of the country, you could be between the proverbial "rock and a hard place." If you have a unique property, it's going to be difficult. If you have a property which is similar to many others, then it might be easier.

The only other option that I can think of is to find another appraiser who will provide you with a higher value for your home. However, you will have to pay for the appraisal and there is no guarantee that he will find a higher value, based on comparable sales in the past 6 months. On the other hand, he might. If he does, you can use this information to negotiate with the bank.

I really don't know what else to advise. Hope this helps.

I have not been in this situation, but I would find and appraiser and ask him or her what is keeping the house from appraising at the loan value you need.

I suspect that it's because the market has slipped, but the appraiser may have some good advice for what you can do at the late stage to make the house appraise higher.

Good Luck

I am in the same situation. I need my final in a couple of weeks.

I needed an appraisal of 1.2 million, got 950k.

You and I have to come up with the cash or loose the whole thing. Simple as that.

I sold one of my cars and refinanced several properties and sold one. You need to do the same thing, sell your assets, cars stock, whatever it is you have been spending your money on. You obviously have assets, you can't get a construction loan these days without the net worth to back it up.

You honestly need to take care of this. The bank will foreclose on you and if all of your contractors have not been paid in full they will start suing you left and right. Every time you loose a suit your credit drops 60 points.