The more we talked and the more we saw of the farm in New Lebanon (hereafter deemed "The Farm") the more we liked. It was bigger than Germantown, definitely had more work done to it and thus less we'd need to do. Although it had less land initially, the option made MORE land available. AND we didn't have to wait to purchase because the purchase price was well within our current budget since we had yet to sell Cottage. The only questions remained had to do with how to get it done.
The initial plan involved a discussion with Farm Credit, who held the mortgage on the property. After a short discussion, we worked towards being able to assume the existing farm loan and then turn around quickly and refinance with Farm Credit to get the additional equity out of the property to finish paying the selling price. At the same time, being worried that there wouldnt' be enough equity to fulfill the purchase price with that plan (knowing Farm Credit will refi no more than 85% of value), we also started talking to Wright-Patt Credit Union about a 5% down conventional loan. Opted for locking in the 3/3 Convertible 30-year ARM rate at 3.5% instead of the Fixed 30 year at 5% knowing we would be refinancing in 18 months time. We signed the contract on the intial purchase for $160,000 with $10,000 back from the seller.
Snag #1 was hit when Farm Credit informed us that their underwriters were concerned we would assume the mortgage then "skip out" on the seller for the refinance. Somehow they thought A) that that was even a remote possibility and B) it would come back to bit Farm Credit. They denied me assuming the mortgage based on those ASSumptions. The loan officer (Megan) is outstanding and I look forward to working with them in the future... this just wasn't meant to work out. So we proceeded on the basis of doing the 5% down loan with WPCU.
Snag #2 was a biggie and happened just a week ago (yes we're all caught up to current already!): the Appraisal. None of us had an inkling in our brains that the appraisal would come back less than $150 at a minimum. Personally, I was thinking mid to high $160's would be the lowest. We were all wrong. Despite having a "farm girl" do the appraisal, it came back and shocked us all -- $126,000. Megan and her appraiser at Farm Credit looked over it for us, I spoke with both Drew and the appraisal company manager and we all tried to figure out what happened. Despite all of us coming up with new comps to give to the appraisers, they refused to budge. She stated their appraisal was good, the comps were accurate, the property was "average" and simply not worth more than $126,000. My favorite was when she described what would be needed for a "Good" rating -- and then proceeded to name things that have already been accomplished (new floors, new roof, new wall coverings). When I mentioned that to her, she was adamant that due to things like the first floor bathroom not being completed, THAT was why the property was "Average". I pointed out that those things would take less than a day to complete and could we do them before closing and having the appraisal changed. I received a resounding NO.
Thanks to Leonard's connections, we are now working with a new mortgage lender. Several people both in and previously in the business have assured us that the appraisal company (Stickleman, Schneider and Associates) have held a reputation for quite some time as being excessively conservative in their appraisals. Lovely. The terms with the new company aren't as nice -- a fixed 30 year loan with a slightly higher interest rate and higher down payment (10%). They of course aren't guaranteeing their appraisal will meet the new contract price ($154,650 - adjusted due to legalities of the seller giving us money at closing), but all indications are that it should at least close the gap. Fallback plan is that the seller will hold a 2nd note that will need to be paid in order for us to purchase the optional land.
So once again in the process we're in "Wait" mode. We do have renters for Cottage all set up (minus an actual contract yet)... and the budget has been modified for the new Farm mortgage payments. It all looks doable. Now as long as the next appraisal comes back ok.
This weekend is the Stagecoach Days festival in town. Chris will be running (run/walking) her first 5K tonight and we'll probably visit the festival sometime tomorrow. In the meantime, we'll be busy doing all those little things that the previous appraiser dinged us on... to get them done before the new appraiser comes out.
Sometime soon I hope to post pictures of the Farm. Have to download them off the camera first. :)