I love the Not So Big House idea so much that I built my own custom version of one.

I built it with my own hands and crew, and I love what I've got.

When my construction loan converted to permanent, I got a really lousy rate.

If I don't refinance soon and lower my payment, I'll lose the house that I've worked on so hard. However, I can't refinance. Appraisers [and thus lenders] totally ignore construction and finish quality and look only at square footage.

I'm desperate. What can I do to fix this problem? Any constructive suggestions would be greatly appreciated.

In Sarah's experience, there are different kinds of appraisers. Some are used to working on architecturally designed houses and so know to appraise a higher value for higher finish levels. If you can find a local appraiser that can do this, it will help a lot. You might start by contacting the architects in your area (some might be found on the home professionals directory on this site) to see if they have worked with or have clients who have worked with this kind of appraiser. With a more accurate appraisal of your house, perhaps you'll be able to find a way out of this tough situation.

Thanks and good luck!

Marie

Marie,

Thanks very much for your suggestion. I tried this to some extent before, but without any success. And AS OF MAY, one can NO LONGER pick and choose their appraiser when it comes to getting a bank loan. Due to new federal regulations, all appraisers must be accepted by the bank from a general pool of appraisers. This makes the prior pot luck situation even worse.

I could still privately hire an appraiser. However, that person's appraisal would be forbidden from use by any bank offering a mortgage. I could perhaps convince the bank's appraiser to look at it, but my experience in the past has been that most appraisers think they're infallible. So, introducing and "outside expert" would be politically very touchy.

I can always "appeal" any appraisal, and try to take it up the chain of authority at the appraisal company. This could provide an improvement. I've considered budgeting several thousand dollars for the appraisal, done over several months PRIOR to the credit check (hit). Using this time and money to chase several appraisers up the chain several levels, until I finally uncover one -- as a result of the randomized starting point required by the feds -- that actually understands [the difference in Beta and VHS. (Of course, VHS won and nobody remembers Beta.)]

Finally, I've been told to look for a local bank that does portfolio lending. This means that they keep their own mortages rather than selling them, and therefore they don't necessarily subscribe to Fannie Mae guidelines. However, I believe it's the case that over recent tough banking years, there are no such local banks anymore. Furthermore, if there were, they would be specializing in a particular local construction technique. For example, log homes in north Georgia. These would be unique and untouchable for most banks. But for the local portfolio lender, these log homes are commonplace and well understood. So, with such a bank, I would STILL NOT fit into their comfort zone because my NSBH is STILL NOT so common in this area.

On the portfolio lending front, it seems that I need a bank that specializes in NSBH. For them, the NSBH would become common and within their comfort zone. I don't know if such a portfolio lender exists...

A NSB House is just a custom home nothing more,nothing less.Banks don't care what you call it or who drew the plans,they just want to be sure they can recoup their losses if you go under.

The problem with financing custom homes is that a portion of most custom homes' value is intangible by conventional appraisal standards. You often have to go through lenders who specialize in custom homes if you are mortgaging a high percentage of the home's appraised value. IMO you should consider hiring a mortgage broker to shop the loan for you.

Best of Luck to you

Hi All-

I'm in this too--I'm indignant about the difficulty of getting financing because of being small!!

It seems that we need to find lenders who specialize in custom homes.

Anybody know of any?

I will pursue and list what I find.

With the housing crisis of our country, I think there is an opportunity here to make some changes in the lending/appraising system parameters. I have no idea how to do this! Anyone have ideas?

Since this is such a pressing issue right now for Not So Big house owners, we asked a friend of ours who works in the mortgage industry if he had any advice to share with you.

He said that a mortgage broker can still pick an appraiser in most cases, but banks now require that they make the choice (as mentioned above). He suggested finding a good mortgage broker that can work with a number of different lenders so they can order one appraisal and try to shop it with multiple lenders.

He also suggested looking into credit unions, which are often more flexible and operate as non-profits in many ways. The alternative would be lenders owned by investment banks, like Charles Schwab Bank or Ameriprise Bank, but he said you have to be a customer of these companies in most cases.

The upshot is that you can get it done, but it will be a lot of work either way.

I hope this provides a little more to work with.

Marie