With the collapse of the housing market hundreds of banks around the nation collapsed as well. Most of these banks were heavily involved with new construction homes. I was not aware of these facts until we began visiting banks to apply for a construction loan. Our home bank has always been Bank of America, so we started there. On the website for the branch near our home was listed the name of several representatives for construction loans. We were surprised to learn that Bank of America was no longer involved with any type of construction loan. I then visited our credit card company Chase at a branch down the street which also stated they were no longer involved in construction loans. I felt I was beginning to see a pattern. After several more of the larger banks said no, we began to ask our family and friends if they could assist us. Luckily one of my close friend's mother worked for a mortgage company that still dealt in construction loans.
The first question was: could we use the land as a down payment? The loan officer said definitely. That was a big relief to us. The next question was: could we get a loan even though we already have a mortgage on our current home that is not sold. We qualified for only 260,000 dollars because we have not sold our current home. In this ugly market in Phoenix I was not surprised that the loan qualification came back so low. But as I stated in the previous blog, the contractor quoted 75-80 dollars per square foot. This would definitely fit our loan for 3,000 square feet. Not to mention the fact that we wanted a home that we could pay off in fifteen years. We could have qualified for 400,000 dollars if we did not have a current mortgage on our home. My wife and I were starting to feel a little better about this new possibility.
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