Too little to late for the economy, but we will get a rebate

[Groundbeef]

I did speak with our closing Lawyer. He seems to think that we have to pay.
What happened is this. With a construction loan, there are several "draws." As each part of the house is built, the bank, or in this case, the mortgage company would pay the builder for that part of the building process. (IE: framing, plumbing, electric, etc...) Each time the builder was putting in for his next draw, the bank was paying them, but holding some funds back because they felt that this or that wasn't finished. At the end, all draws were paid, but not in full. The builder didn't notice. (bad builder) The bank was nice enough to knock it off what we owe them (good bank), but didn't tell us about it (bad bank). Now, the builder went over their books and found the shortage. The bank says, "We closed, it's a done deal." The builder says, "I want my money." The lawyer says, "you signed a contract that says that the builder gets paid X amount of money. If he wasn't paid in full, and the bank won't pay him, then you have to pay it." Most banks have been telling us that the market is in decline and we do not qualify for a refinance. We found one Mortgage company who is willing to let us refinance. Not sure of the numbers yet. We should know in a few days what we can lock at and what it will cost us. Till then, no spending!

The builder is a family run company. They are very nice. They did a great job and deserve to be paid.
The first Mortgage company is just now getting us details and paperwork from what happened. They claim to have a signed document from the builder stating that he was paid in full. We may have a loophole, but not sure if we are willing to screw over these nice people. We are thinking of asking them to split the closing costs with us.
No lein's have been placed at this time.

If what you posted is correct to the letter, then YES you will be liable for the money owed. As you stated above, the bank "held back" funds from the contractor. This is typical of residential construction. Sort of an insurance policy so the builder does his "punch list" before closing.

The squirly part is that your builder didn't request the funds from the bank. That is pretty unusual, but if its a small company with lax accounting (ie wife does it on Quicken...but only when she gets around to it) its not impossible.

The good thing is that they were not paid, and demanding additional funds. (That can happen, and it gets very, very messy).

If you were to decide to NOT pay, bad things can happen. The builder could/would file lein waivers on your home. This would prevent you from obtaining a clean title if you ever needed to sell. The could also forclose on the property in some areas, but I'm not an attorney, and not familiar with your local laws.

If your bank does come up with paperwork stating the builder was "Paid In Full", and the builder signed, then the issue becomes a bit more murky.

On a side note, why refi the entire mortgage? Why not go home equity route? Rates are pretty low, and you can get terms up to 15 year. I would look that way. Sure, its a second mortgage, but the interest is tax deductible, and then you don't have to screw with the 1st mortgage.

[GMichael]

If what you posted is correct to the letter, then YES you will be liable for the money owed. As you stated above, the bank "held back" funds from the contractor. This is typical of residential construction. Sort of an insurance policy so the builder does his "punch list" before closing.

The squirly part is that your builder didn't request the funds from the bank. That is pretty unusual, but if its a small company with lax accounting (ie wife does it on Quicken...but only when she gets around to it) its not impossible.

The good thing is that they were not paid, and demanding additional funds. (That can happen, and it gets very, very messy).

If you were to decide to NOT pay, bad things can happen. The builder could/would file lein waivers on your home. This would prevent you from obtaining a clean title if you ever needed to sell. The could also forclose on the property in some areas, but I'm not an attorney, and not familiar with your local laws.

If your bank does come up with paperwork stating the builder was "Paid In Full", and the builder signed, then the issue becomes a bit more murky.

On a side note, why refi the entire mortgage? Why not go home equity route? Rates are pretty low, and you can get terms up to 15 year. I would look that way. Sure, its a second mortgage, but the interest is tax deductible, and then you don't have to screw with the 1st mortgage.

We were looking that route, but so far, every bank has told us that there is an 80-85% max. This would not get us enough to pay off the builder. With a total refi we may be able to get below the 6.00% we are paying now. That would help, but then there's the closing costs.

[Groundbeef]

We were looking that route, but so far, every bank has told us that there is an 80-85% max. This would not get us enough to pay off the builder. With a total refi we may be able to get below the 6.00% we are paying now. That would help, but then there's the closing costs.

80-85% max on what? That usually on the 1st mortgage. The primary loan holder wants to have some equity in the mix. The second isn't usually that way.

In all seriousness, try lendingtree.com. We used it for a couple of mortgages, and they worked out great. If you go online now, within a few hours you will get between 2-6 offers for the deal. Most have no closing costs (they are buried in the loan. Don't worry, every bank gets their money!) and pretty good terms.

PM if you want more info offline.

6.00% is pretty good. We locked in a 30yr at 5.25%

Good luck.

[GMichael]

80-85% max on what? That usually on the 1st mortgage. The primary loan holder wants to have some equity in the mix. The second isn't usually that way.

In all seriousness, try lendingtree.com. We used it for a couple of mortgages, and they worked out great. If you go online now, within a few hours you will get between 2-6 offers for the deal. Most have no closing costs (they are buried in the loan. Don't worry, every bank gets their money!) and pretty good terms.

PM if you want more info offline.

6.00% is pretty good. We locked in a 30yr at 5.25%

Good luck.

The places we've spoke to have all said that their policies just changed recently. 95% was no problem last year, but with all the people faulting on their loans lately, they are cracking down. Even the bank my wife works at turned us down. An equity loan was the way we wanted to go to aviod the PMI charge. We do have a mortgage company that wants to work with us. We may be able to get down to 5.25 if we are willing to pay a couple of points. We'll see how the numbers look before we lock.

[Groundbeef]

The places we've spoke to have all said that their policies just changed recently. 95% was no problem last year, but with all the people faulting on their loans lately, they are cracking down. Even the bank my wife works at turned us down. An equity loan was the way we wanted to go to aviod the PMI charge. We do have a mortgage company that wants to work with us. We may be able to get down to 5.25 if we are willing to pay a couple of points. We'll see how the numbers look before we lock.

I see. Makes sense. Don't forget, you can amortize points on your taxes. Its not the best, but at least you get to take some off your taxes.

Also, if you have to pay PMI, keep your eye on it. After you pay down enough, make sure to ask your bank to remove it.

Or, in the off chance that home prices come back, and grow, get a new apprasil in a couple years. If it has appraised up (appreciated) enough to get your loan under 80% you can drop the PMI.

BTW what the hell was this thread on again?

[GMichael]

I see. Makes sense. Don't forget, you can amortize points on your taxes. Its not the best, but at least you get to take some off your taxes.

Also, if you have to pay PMI, keep your eye on it. After you pay down enough, make sure to ask your bank to remove it.

Or, in the off chance that home prices come back, and grow, get a new apprasil in a couple years. If it has appraised up (appreciated) enough to get your loan under 80% you can drop the PMI.

BTW what the hell was this thread on again?

Yeah, we'll keep a close eye. We just closed on this house in November of 2006. All this is still all fresh in our memory. Wish we didn't pay $2500 back then to get our % down. It didn't pay off. Thanks for your help.

It was about the tax bonus and what we will spend it on. I guess mine is going towards a house in a way. What are you doing with yours?

[pixelthis]

Yeah, we'll keep a close eye. We just closed on this house in November of 2006. All this is still all fresh in our memory. Wish we didn't pay $2500 back then to get our % down. It didn't pay off. Thanks for your help.

It was about the tax bonus and what we will spend it on. I guess mine is going towards a house in a way. What are you doing with yours?

Look at the bright side, you DID get a house, something that will be very hard to do in the coming months.
Anyway I'd like to sell the VIZIO AND, WITH THE REBATE, GET A 1080P, OR AT LEAST A SET WITH THREE HDMI.
Sony has always been my brand, don't know if I can afford one though