My original plan was to complete work on the third floor by Sunday night. It was not to be. Realistically, though, I did paint the other room today and hope to have the second coat done tomorrow. Then, we'll call the third floor done - at least until the plaster repair is done, when I will paint the half bath and its floor.
My husband and an awesome friend demo-ed the basement on Saturday. There were a couple other guys who came over to help out when they could. A big hat's off, though, for our friend Larry who was there most of the day and worked so hard for our benefit. What a man of service! I should have taken before and after pictures... what a difference!
Up next, tiling the basement half bath. I wonder if I can do that by myself? We'll find out tomorrow!
Monday, March 28, 2011
Saturday, March 26, 2011
The first days
Work on the house has been going slowly. Or quickly, depending on the day.
So far, we've demo-ed the basement - starting Wednesday, when the girls and I pulled up the tile flooring in the basement. In half the basement, was this beautiful linoleum tile that looked like brick. I hated to see it go, but it just wasn't in good shape. Actually, it was disgusting and ugly, which is why there was no attempt to salvage it. In the basement half bath was one-inch ceramic tile that was not very fun to get up - particularly since we didn't have the right tools - just a wonderbar and hammers.
I also discovered that the contractors who'd been at the house on Friday unlocked all the windows, which was really nice of them. I did change the locks again on Wednesday. I really enjoyed buying another doorknob that doesn't match with the deadbolt for the same door. (After all the work is done, we'll key everything the same.)
Thursday, we prepped the walls upstairs for painting and I spent a couple hours weilding a razor blade and removing graffiti from a window. I probably went back to Lowe's, too. I'm on a first-name basis with some of the associates now.
Friday, my apprentice and I cleaned part of the second floor bathroom so we could use the sink and toilet without being icked out. I'll wait to clean the floor until construction is done and the tub will be cleaned after the utility sink is working (we've been using the tub to wash painting supplies). We painted the girls' room and prepped the walls in the other room up there.
My favorite part thus far is having new neighbors over for a beer while I was painting on Friday night. Awesome.
So far, we've demo-ed the basement - starting Wednesday, when the girls and I pulled up the tile flooring in the basement. In half the basement, was this beautiful linoleum tile that looked like brick. I hated to see it go, but it just wasn't in good shape. Actually, it was disgusting and ugly, which is why there was no attempt to salvage it. In the basement half bath was one-inch ceramic tile that was not very fun to get up - particularly since we didn't have the right tools - just a wonderbar and hammers.
I also discovered that the contractors who'd been at the house on Friday unlocked all the windows, which was really nice of them. I did change the locks again on Wednesday. I really enjoyed buying another doorknob that doesn't match with the deadbolt for the same door. (After all the work is done, we'll key everything the same.)
Thursday, we prepped the walls upstairs for painting and I spent a couple hours weilding a razor blade and removing graffiti from a window. I probably went back to Lowe's, too. I'm on a first-name basis with some of the associates now.
Friday, my apprentice and I cleaned part of the second floor bathroom so we could use the sink and toilet without being icked out. I'll wait to clean the floor until construction is done and the tub will be cleaned after the utility sink is working (we've been using the tub to wash painting supplies). We painted the girls' room and prepped the walls in the other room up there.
My favorite part thus far is having new neighbors over for a beer while I was painting on Friday night. Awesome.
Wednesday, March 23, 2011
It's a beautiful day!
Okay, it's not a beautiful day outside, as it's raining and set to do so all day. I've been up since 3AM for no good reason and am sure to be exhausted in a couple hours.
But today is the day we close! The projects begin in earnest today, demo is high on the list.
I can't wait. I think I'll take a nap for now, though.
But today is the day we close! The projects begin in earnest today, demo is high on the list.
I can't wait. I think I'll take a nap for now, though.
What's a draw inspection?
So, what happens with a 203k loan? Here's a look at the numbers:
- The purchase price of the home must be in line with an "As Is" appraisal
- the total loan amount includes the purchase price and the cost of the repairs, plus 10% of the repairs
- that 10% should be factored in when considering your budget - you don't want your cost of repairs to be your desired budget. The bank will automatically add in this 10% for unexpected repairs, so you want to be sure you can afford the mortgage payment. If nothing unexpected does arise, this 10% is automatically applied to the principle of your loan after all the work is complete - remember, though, that won't change your monthly payment.
- Your "After Construction" appraisal must match up with or exceed your total loan amount. The appraiser uses the 203k report to determine what repairs will be completed after closing. In some cases, you may be able to borrow 110% of the "after construction" appraisal - but that is a dangerous thing to do - why knowingly get into a loan situation that will be upside down from the beginning?
- After closing, you have a certain period of time to complete the work. This usually does not exceed 6 months. In our case, we plan to have the work complete within 5-6 weeks.
- In order to pay your contractor or be reimbursed for materials, you have to have a draw inspection. The number of these inspections varies based on the project and you are paying per draw for the consultant to come out and inspect the work and then prepare the request for the draw from the bank. Once the bank receives the request, a check will be mailed to the contractor, but the homeowner has to sign the check as well. This is a protection to keep contractors from collecting money for an incomplete project. The bank also withholds 10% from each draw, to ensure the project is completed in a timely manner. That final 10% is paid to the contractor after full completion of the project.
- If you do not require as many draw inspections as were written into your loan, the unused fees are applied directly to your loan principle.
- Be patient. Everyone involved is doing more paperwork than typically required, especially the contractor!
- If you were smart with your budget, which I am desperately trying to be, you will soon be in a fantastic home at a price you can comfortably afford.
What is a 203k loan?
In our case, the house had some issues that would prevent it from passing an inspection. For a conventional or an FHA loan, the issues would have been a deal-breaker. Any repairs would have had to be made prior to closing - which is risky when you don't own the home.
We were willing to do some of those repairs just to get the house to pass inspection, but when the list exceeded $500, which it quickly did, we had to look at an alternative. So, we switched loan officers/banks in order to bypass the inspection requirement for the loan.
Here is a list of items that were required to be fixed just to get a non-construction loan:
The 203k consultant inspects the property and talks to the buyer about any other upgrades that they'd like written into the loan. This is the bonus part of the process - if the home will appraise appropriately, you are allowed to borrow (as part of the mortgage, not separately) money above the cost of the necessary repairs to make desireable updates to the home. Be careful, though, when you tell him what you want to do - if you change your mind and don't do something, you can't get that money to use toward something else in the house. Everything that is put on the worklist must be completed - even if it is a desireable update. I'll get into the numbers in the next post.
After the evaluation, the consultant prepares a report, listing required repairs and planned repairs. He will send you and your mortgaging bank a copy of the report, with "market" construction prices for those repairs. He will also send you a report without numbers, for contractors to bid on the job. In some states, you might be required to use a contractor from their approved list. In our case, we were permitted to use anyone we wanted, as long as s/he is licensed.
I suppose this is the part that can take longer for the loan to be processed - waiting on contractor bids. We did not have a wait, as we had already been in touch with a contractor and he'd been through the home. We know him and knew he was the guy for the job. He had already done a preliminary report for us and all he had to do was fit our budget into the list from the 203k report.
There was a lot of paperwork involved in these steps, but our loan officer was fantastic and methodical in letting us know what we needed to submit. The 203k consultant was great because he knew what our budget was and he told us what we needed to cut from our "desireable" list in order to get the project completed on budget. He also told us that some things (like replacing outlet covers and painting walls) could be completed by us, freeing up some of the labor cost for better fixtures or whatever. But the whole list has to be completed for his follow-up draw inspections.
A lot of work, for sure, but our hope is it will be worth it when we're in our new (old) home.
We were willing to do some of those repairs just to get the house to pass inspection, but when the list exceeded $500, which it quickly did, we had to look at an alternative. So, we switched loan officers/banks in order to bypass the inspection requirement for the loan.
Here is a list of items that were required to be fixed just to get a non-construction loan:
- there are no appliances (they'd been stolen at some point in the past year, as the property was vacant), and FHA requires a working range and range hood in the kitchen.
- It didn't have working heat
- secure exterior doors (they'd all been broken and vandalized)
- sheet rock in the kitchen was damaged
- there are broken and missing light fixtures...
- and the final straw, a foundation leak that meant with every rain or snow melt, water was pouring into the basement.
The 203k consultant inspects the property and talks to the buyer about any other upgrades that they'd like written into the loan. This is the bonus part of the process - if the home will appraise appropriately, you are allowed to borrow (as part of the mortgage, not separately) money above the cost of the necessary repairs to make desireable updates to the home. Be careful, though, when you tell him what you want to do - if you change your mind and don't do something, you can't get that money to use toward something else in the house. Everything that is put on the worklist must be completed - even if it is a desireable update. I'll get into the numbers in the next post.
After the evaluation, the consultant prepares a report, listing required repairs and planned repairs. He will send you and your mortgaging bank a copy of the report, with "market" construction prices for those repairs. He will also send you a report without numbers, for contractors to bid on the job. In some states, you might be required to use a contractor from their approved list. In our case, we were permitted to use anyone we wanted, as long as s/he is licensed.
I suppose this is the part that can take longer for the loan to be processed - waiting on contractor bids. We did not have a wait, as we had already been in touch with a contractor and he'd been through the home. We know him and knew he was the guy for the job. He had already done a preliminary report for us and all he had to do was fit our budget into the list from the 203k report.
There was a lot of paperwork involved in these steps, but our loan officer was fantastic and methodical in letting us know what we needed to submit. The 203k consultant was great because he knew what our budget was and he told us what we needed to cut from our "desireable" list in order to get the project completed on budget. He also told us that some things (like replacing outlet covers and painting walls) could be completed by us, freeing up some of the labor cost for better fixtures or whatever. But the whole list has to be completed for his follow-up draw inspections.
A lot of work, for sure, but our hope is it will be worth it when we're in our new (old) home.
Friday, March 18, 2011
right hand: "hello? left hand, are you there? what are you doing?!?!"
I got a call from a friend this afternoon - she had obvious excitement in her voice as she asked what construction was going on at our not-yet-closed-upon home. After I freaked out and practically hung up on her as I tore out of the house, I arrived at the house - maybe 60 seconds after her phone call. As she had said, there were trucks in the driveway and workers all over.
Some might think this is a good thing, but what you don't know is the listing agent told us last week that noone would be entering the house again before closing. And because someone had stolen a key out of the lockbox and had been going into the house without authorization, the listing agent suggested the locks be changed (which I did the next day).
So, I park across the street and walk over and ask if I can help them with anything. "Is there something I can help you with?" And the ringleader said with attitude, "Is there something I can help YOU with?" I explained that noone had authorization to be in the house and that we were closing in 4 days. He showed me a work order from the bank that currently owns the house.
????
The house is being sold "As Is".
Yeah.
I'm still confused.
So, I asked about the lock - and yes, he broke the new $60 lockset that I put on a week ago. The listing agent has no idea why there are contractors at the house. The buying agent has no idea why there are contractors at the house. The title company has no idea why there are contractors at the house. I have no idea why there are contractors at the house.
I wish I could feel happy about there being contractors at the house, but it makes me nervous - does the owning bank even know that we are closing on this house in 4 days? Did the listing agent bother to tell them? Why are they fixing things? They threw a fit when we submitted an offer that requested repairs and responded with a statement that they are only accepting offers AS IS. What on earth is going on here? Why are they fixing things now? Do they have a contract with someone else? Oh my goodness, why didn't I wonder that before right now?
Quite honestly, I'm a bit angry too. We don't have limitless money and that $60 doorknob was going to be the permanent knob after we move in - keyed to match the other knobs that are sitting in our foyer waiting for closing next week and new doors.
All I can say is I am so confused and starting to be really worried about this.
Some might think this is a good thing, but what you don't know is the listing agent told us last week that noone would be entering the house again before closing. And because someone had stolen a key out of the lockbox and had been going into the house without authorization, the listing agent suggested the locks be changed (which I did the next day).
So, I park across the street and walk over and ask if I can help them with anything. "Is there something I can help you with?" And the ringleader said with attitude, "Is there something I can help YOU with?" I explained that noone had authorization to be in the house and that we were closing in 4 days. He showed me a work order from the bank that currently owns the house.
????
The house is being sold "As Is".
Yeah.
I'm still confused.
So, I asked about the lock - and yes, he broke the new $60 lockset that I put on a week ago. The listing agent has no idea why there are contractors at the house. The buying agent has no idea why there are contractors at the house. The title company has no idea why there are contractors at the house. I have no idea why there are contractors at the house.
I wish I could feel happy about there being contractors at the house, but it makes me nervous - does the owning bank even know that we are closing on this house in 4 days? Did the listing agent bother to tell them? Why are they fixing things? They threw a fit when we submitted an offer that requested repairs and responded with a statement that they are only accepting offers AS IS. What on earth is going on here? Why are they fixing things now? Do they have a contract with someone else? Oh my goodness, why didn't I wonder that before right now?
Quite honestly, I'm a bit angry too. We don't have limitless money and that $60 doorknob was going to be the permanent knob after we move in - keyed to match the other knobs that are sitting in our foyer waiting for closing next week and new doors.
All I can say is I am so confused and starting to be really worried about this.
Wednesday, March 16, 2011
....and we're out of the gates!
We went to see the other house, still just a few blocks from where we currently live, on Sunday of Thanksgiving weekend. Our breath caught in our throats as we wondered if we might be able to buy such a gem.
.
We immediately got the name and number of the loan officer and made a call. We spoke with our agent and talked about what sort of number we might offer. And then sat on it. For weeks. We didn't know what was coming job-wise and it was a bit earlier than we'd anticipated moving and we weren't sure if we were being romanced by a great house in a location we were happy with. So we waited for a couple more weeks. (That's four weeks, if you're counting.).
Finally, the week before Christmas, we submitted the paperwork for the loan pre-approval and saw the house again on Christmas Eve. (Yes, I realize we're a little crazy, but everyone was available then, including our friends who are "old house people".) A day or two after Christmas, we submitted an offer. We were surprised when the offer was accepted with a few minor changes.
.
The day we were looking over the changes and preparing to submit a minor-counter- to their counter-offer, we heard that they were expecting another offer. Against our better judgement, we decided to accept all conditions in their first counter-offer. Of course, this was right before a holiday weekend, so we didn't hear anything until the next week, when they asked for our "best and highest offer".
.
We submitted that right away, since our agent had anticipated that and we'd already discussed what that would look like. It turned out that the other offer was better, so we lost.
.
Of course, we were disappointed. But something (Someone?) whispered in my ear that it wasn't over yet. I was convinced that the Lord took this house off the market then for some reason and that we would have another opportunity when the timing was "right". .... and... my husband thought I was crazy.
.
Everytime we'd drive past, I would lament the "house that could've/should've/would've been". But, at some point in that month, it was made clear to me that it WAS God's work! Due to company changes, my dear had no job in this state. He headed to the midwest while they "tried to work on something here". Through this whole process, we chose to trust the Lord with our lives and our livelihood. We prayed daily (multiple times daily) that He would reveal His will to us. My husband wondered if we might have to make a move to the midwest, while I was convinced this was just a bump in the road. We did, however, look at one other house - as a back-up. We didn't love it, but it needed no work at all and we knew that if that was where we were led, we would make it into a cozy home. At this point, we just wanted to be together.
.
On the day he received the call to tell him that the job in DC was definitely going to be available to him, the house was relisted as active. The contract had fallen through!
.
We submitted a third offer right away. Then found out that due to conditions in our offer, the listing agent wouldn't submit the offer to the bank that owned it. They were only interested in "As Is" offers. Over that weekend, they lowered the price, due to the demo in the basement and lower level half bath. We rescinded our contract and lowered it, submitting a fourth offer. The next day, before they responded, we heard again that they expected another offer to come in.
.
As expected, we were asked for our "best and highest" offer. We submitted one after a visit with a contractor gave us a good estimate for repairs. We were uncertain what would happen, because we did know that the other offer was a cash offer from an investor and that would be preferrable to our construction loan offer.
.
We were surprised and excited when we received a counter-offer that changed only minor aspects of our fifth offer. Within a couple days, we had a ratified contract!
.
It was expected that, due to the type of loan we will have - a 203k construction loan - the next part of the process would be harrowing.
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