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  • johnirvin000

Planning, Banks, and Loans

Or the part where I learn financing sucks!

After all the initial purchase and registration of the land in my name came how to go from raw agricultural land to a plot of land legally allowed to have a home built on it and that home lived in.

First on list was to find an architect to realize what I had in my head and get it out on paper in a standard building trades could understand. This took some time as what I wanted was both good work that was easy to understand and a price that would not break my pocket book. Using the power of google I found a husband and wife pair from Arroyo Seco in Taos County. I worked with the husband of the pair. He was eager to work with me at a price that I was comfortable with and didn't think my idea was to crazy at all though others I had contacted did.

What I knew I wanted was small but not tiny house small, energy efficient, 1 bedroom 1 bath, and most importantly long lasting and minimal maintenance.

Initially I started with the idea of double stud construction to maintain the condition space with minimal input of energy. This style has been used in passive houses because the wall design effectively double the R-value of them. I had decided on steel siding and roof due to longevity of the materials and water tightness even with surface rust. I wanted the floor to be bare concrete as a slab on grade without a covering.

After working through the process and prices of what I wanted it was suggested to me that I look into adobe as it had higher thermal mass and would require less wood and it was almost cheap as dirt. Which after some research I was totally onboard with.

This point on the time line I had a rough draft of what I wanted so it was time to talk to a bank to make sure that I could afford this. The rough draft of the house was just under 800 sq ft livable. More than enough for one man and his cat.

I started looking for a loan and learned that I actually needed two loans. The first loan was for construction and was a interest only payment to reserve the money and pay to the builder. I then needed an actual mortgage that would take over after the building was complete. Well this also happened to coincide with the nationwide lock down due to COVID-19. Money dried up quickly and even the banks saying the could do construction any other time were far and few between.

I found a mortgage broker local to the area who said that he would look into it for me. I provided the information to him and said keep me posted. One month later came back to me and said that we had a problem. My house was too small for the bank to loan on it.

This was the point that I went WHAT??? I had never heard of this kind of problem. The mortgage broker explained to me that all loans for construction and mortgage needed to be for homes large enough to be marketable in case I didn't complete the project or mortgage. He also mentioned that the size needed was minimum 1000 sq ft. At this point it was back to the architect.

My architect reluctantly agreed to add another bedroom to my house plan which we then put out for bid. When the bids returned they were way higher than I was willing to pay for 2 beds 1 bath home. I was stuck so it would seem.

Then I found out about owner builder permitting. In New Mexico they allow individuals to build there own single family homes with a pretty straight forward process. You still have to comply with all codes and inspections but you can act as your own general contractor. Huzzah I thought and did some more digging.

Turns out that this is the ideal answer for me as I have skills when it comes to being a project manager (job experience for the win) and I am fairly adept at using hand and power tools. I can also use sub contractors for the work I don't want to do or don't have the skills to do. The only prohibitions on DIY home building is HVAC, any gas work (LP, Proane, Natural gas), and Solar.

After figuring out about owner builder I started down the paperwork path. I had to get an address which was a form to the county. Thankfully sending it in and getting it back was really straightforward. Next thing on my list is to do the zoning approval and clearance packet which needs four signatures from the departments of solid waste, water, electricity, and the county treasures office. I also need to get the actual building permit and sign a form guaranteeing that I will be acting as the general contractor.

That catches you up to current. Next entry will be future plans and some design stuff.

Stay Groovy.

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