Sunday, September 23, 2007

Can we or can't we?

OK, follow up on a long absence: The bank extended out 45 day deadline to get the loan with no points attached. We now have an additional 30 days to secure the loan at the same rate, even though Mr. Bernanke just dropped the interest rate .5%. Gee, that ought to make things work better (yeah, right).

Final floorplans are still MIA, but our plumber, HVAC guy, and electrician are working off of the plans I made myself from our own measurements. I'm sure I'm missing a lot of the uber-technical stuff, but hopefully, by the time we need to submit the final plans to the City, we'll have something worthy of approval. We got new estimates for the roof & boxg utters, as well as for the demolition, so it looks like we can shave off a few thousand off of the budget, which is what makes the deal work for the Bank, it seems. Our banker is earning his keep on this loan. A lot of tough sells to us in a tough environment with a lot of barriers thanks to the complexity city loan(s).

Frankly, the hubby and I sat down and had another serious talk about financing this project. The Bank seems to want to lock up a lot of our cash in order to secure a larger (potentially unnecessary) loan. Their main concern is that we have enough funding to finish the project so that if anything goes seriously wrong, they won't lose on the deal. Understandable, they're in the business of making money-- aren't we all?--and they are more risk averse in this environment, too. The problem arises when and how the bank and the City disburse the loan amounts. If you thought the City just hands you a Rehab Loan check for $25K, you'd be wrong. Same goes for the Bank. They only get you the funds (limited by the estimates of the work yet to be done) as they see fit as you need it, and as certain goals are met.

And they won't be giving us anything to get things started. That's apparently on our shoulders.

The Bank wants to disperse funds only after the City lends us the Rehab loan. They also want us to use out funds first. The City won't give us any funds directly but only to the contractors who are doing the work for us. Which of course make me wonder, what if we're doing the work ourselves? How do we get the money then?

Especially when the Bank has required that we keep $XXK (significant sum) in a CD at the Bank that we can't use even if we absolutely need it.

If we get into a cash crunch during the first month of the project, how are we supposed to meet the goals set by the Bank and the City? I'm just starting to feel that someone's trying to push us into a corner financially so that we are completely dependent on the good graces of others. (late addendum by M: Evidently the way to make the project work is to let your conscientious banker and your amazingly responsive city folks figure it out with each other, as they did)

I don't like corners.

If this project doesn't start making me feel like it's going to benefit us and not just the Bank and the City (not that either hasn't been trying very hard to get this project done), after the conversation I had with my husband, I am fully prepared to walk away.

I HAVE to be prepared to do that. Everyone does. Real estate and homeownership aren't "can't lose" propositions. There are risk risks that folks are only beginning to grasp. You can't get into the mindset of "oh, everything will work out just fine" because sometimes it really doesn't. Remember, if it's not in YOUR best interests, walk away. A.k.A.: "If you find yourself in a hole, the first thing to do is stop digging."

And now for the entertainment part of the post.

Have you ever felt that someone was trying to get your goat-- trying to get you to say or do something in order to catch you making a mistake? I've been feeling that a lot lately...

I've always wanted to respond to silly questions like the Senator in the clip below. I couldn't stop laughing. I've watched it 3 times today already.......

I can see it now...
Bank: "So what are you going to build the walls with in your rehab project?"
Me: "With the finest construction materials available that fit the code requirements in the state of Kentucky."
Bank: "Like what?"
Me: "Well cardboard's out."

Watch and enjoy.

In my case, I just hope the front doesn't fall off of the house.

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