Refi on New Construction

[HA123]

Been appraising 20 years and never had this situation. I get sent out on what ostensibly is a refi appraisal. I get to the property and it's a dwelling under construction (about 95% finished on the interior, no driveway or yard).

I went back to the client, assuming it's a purchase and they sent it over incorrectly as a refi. They are saying it is a refi.

So, my question is: Can an appraisal even be done as a refi in this situation?? (Dwelling not finished, not occupied, no idea if original purchase has closed). My thinking is that it can't, but I'd like more opinions. Thanks

 

[TerryRohrer]

Seems likely they would be refinancing the construction loan. Does the borrower own the site?

 

[glenn walker]

Been appraising 20 years and never had this situation. I get sent out on what ostensibly is a refi appraisal. I get to the property and it's a dwelling under construction (about 95% finished on the interior, no driveway or yard).

I went back to the client, assuming it's a purchase and they sent it over incorrectly as a refi. They are saying it is a refi.

So, my question is: Can an appraisal even be done as a refi in this situation?? (Dwelling not finished, not occupied, no idea if original purchase has closed). My thinking is that it can't, but I'd like more opinions. Thanks

Maybe its refinancing out of a Construction Loan to a Permanent one. Yes it can and is done all the time

 

[HA123]

Seems likely they would be refinancing the construction loan. Does the borrower own the site?

Yes. "bought" the site from the builder since the builder was going to also build the house

 

[HA123]

Maybe its refinancing out of a Construction Loan ?

I'm assuming that this is the case, but I've never heard of this happening until after the dwelling is finished and the owners have lived there a while.

 

[glenn walker]

I'm assuming that this is the case, but I've never heard of this happening until after the dwelling is finished and the owners have lived there a while.

You learn something new every day in this business- That Lender has a program to do it others may not.

 

[glenn walker]

The borrower probably paid cash for the lot and thats why its done this way .

 

[glenn walker]

The owner cannot occupy the home until he pays off the Construction Loan and gets a Permanent Loan on it. Right Now He Only Owns The Lot the Construction Loan Lender will not release the propert until he pays them off. Often the same lender who does the Construction loan also does the final take out loan--but in this case it appears they are not and the borrower had to go to another lender.

I'm assuming that this is the case, but I've never heard of this happening until after the dwelling is finished and the owners have lived there a while.

 

[sputnam]

If the borrower owns the property and is building the improvements under contract with the builder.... it is technically a refinance. We appraise land.... and whatever is or was or will be attached to the land. Most Lenders aren't that picky about it but, your Lender is not wrong.

 

[HA123]

The owner cannot occupy the home until he pays off the Construction Loan and gets a Permanent Loan on it. Right Now He Only Owns The Lot the Construction Loan Lender will not release the propert until he pays them off. Often the same lender who does the Construction loan also does the final take out loan--but in this case it appears they are not and the borrower had to go to another lender.

So, for my purpose, I just do a Subject To refi appraisal?