Rates, Waits, and Tierra del Sol

I'm not in a great place with land looking lately.  It's so complicated, and so thwarted, and so miasmic... it's overwhelming.  You know that scene in The Goonies where the redhead has to play particular notes on a piano made of bones so they don't die?  It's maybe a little like that in that, the information I need is out there... somewhere.  I just have to find it, understand it, then play the right notes.  Though I'm not going to die anytime soon (I don't think), but I sure am frustrated and weary.

We've gone back and forth a lot with options.  Yes, the original plan was to buy land for ~$100K, which we honestly thought was plausible, and then build for ~$70K.  But there is no usable land for that amount.  Everything that might be that amount or less would need tons of work ($$$) to make it buildable.

So we looked into land lot loans.  They're really difficult to get.  You can do seller financing a lot of the time, but the rates on those are generally 3-5% and the loan length is usually 5-7 years.  So... you don't end up with low payments so much.  And the land loans... a bunch of places don't do land over 10 acres.  Or some do land over 10 acres but won't give out more than $75K or something.  And then, because banks really don't want the hassle of selling land that's unbuildable, the loans you can get for raw land, or unimproved land, are few and far between.  Many won't do loans for land that doesn't have utilities at the street.  And then, many more only do loans for agricultural people, or veterans, or hedgehogs.  I may be prickly at times, but they said that didn't count.

We did see the smartness in the idea a friend gave us about buying a cruddy little home on a bunch of land and then getting a mortgage.  Mortgages are much easier to come by in general.  And we'd have a place to live while we built our home.  On that note, we told Adam to find us properties and he did.  There was one in Ramona that probably would have been fine.  The house was shit, but we'd be tearing all that up anyway.  The issue was that the 3.4ish acres were in spitting distance from neighbors.  It was a very neighborhoody area... We just couldn't.  We don't like being spit on that much.

The next options were some properties out in Campo and Boulevard.  Those are really far away, but the one in Boulevard looked, well, perfect... on paper.  It was 2 bedrooms (bigger than wanted but...), beautiful rock formations, a garage, lots of flat land, a seasonal stream and pond.  So, despite the hour and 20 minute commute for Chris, we asked Adam to show it to us.

In order to show us the land, he had to have a prequalifying letter about us getting a mortgage.  Now, I'd spoken with my sister earlier because she knows mortgages and she said that we would want pre-approval.  But apparently prequalification, while different and not as useful, was the only thing that would do for this.

As such, we talked to Adam's friend/colleague Robert.  It was Sunday so that felt right odd, but apparently he's swallowed the protestant worth ethic along with the sinker.  We were dismayed to hear that with a home costing ~$435K, which is a very low price for here, and a really good rate (2.5% for 30 years) our monthly payments would still be much higher than what we pay in rent right now.  And that's really been our guiding goal... pay less than we do now because we're not able to support ourselves on what we make right now and the money is going to run out at some point!

We also don't want a loan for 30 years.  We're both in our 40s, so we'd be paying that until we're dead or nearly dead.  But I checked in with my sister and she said that, yeah, the payment seemed right to her.  And anyway, it was only a prequalification, not a contract.

We were surprised but Adam actually came to show the property to us himself!  Yay!  We got to meet him!  He told us to meet him at a particular junction.  We decided to follow the GPS instead of his directions.  This turned out to be a mistake.  The road was shit.

This was not the worst area, the worst area jostled us so much I couldn't snap a pic

But we met Adam and, after Adam got lost a few times, we followed him to 1576 Tierra del Sol.  It's a pretty property, up the shite road, in the midst of California desert; which is different from the desert I'm familiar with, but I'm hard pressed to explain how.  It just feels different.  

It had lots of pine-y trees.  I don't know what sort are common here but they weren't the triangular kind of pine tree you get in New England.  More the leggy kind, like Ponderosa.  

The house was going undercover in a fish scaly green color.  I'm not actually sure for what the fencing was.  There were many structures inside the corral the function of which remains a mystery.

I didn't take pictures inside the house because I forgot.  It was dark with thick, dampish feeling carpeting through most of the rooms.  Yeah, I had my shoes on.  The damp feeling was just... it was more of a sense of atmosphere than reality.  The only place in the house we liked was the tiny dining area that was wood paneled and had a lot of light.  It doesn't so much matter if we don't like the home though.  What mattered is if we could use the land and convert the home and... we really couldn't.  The home wasn't facing south, nor was there even a side to the south.  There was a corner to the south.

And this is the south view

Here's the separate garage and greenhouse

Oh, there was plenty of usable land where we could build our home.  That part was fine.  There were even many drivable paths around the property, which was useful and Adam said was largely for the Fire Marshal's wishlist.

It did have a pretty nice, already built patio.  Concrete isn't my fave but it's already built!  There was a lot of chain link around the place.

This is the seasonal pond we decided.

The view to the west was best.

This home would have had to be just perfect for us to take it.  The drive was really long.  We left at ten minutes to 1300h and didn't get home until nearly 1700h.  And we didn't stay long at the property.

But, that prequal saying for a $435K home we'd have to pay ~$2.5K a month?  Gads!  I set about to make myself a spreadsheet that compares the relative financial impact of the many options we have.

And we have options.  Besides a mortgage if we bought an existing property, there's still the idea of a land lot loan to buy just land.  And then there are also construction loans for the building itself.  And then there are construction to permanent loans, which at first seemed ideal.  

Construction to permanent loans you can use to buy land, pay for the building of the home on the land, and then it converts into a regular mortgage.  So, like three loans in one.  Just what we need, right?  Well, you have nearly the same issues with this loan as with the land lot loans but in addition, most of these require that you have a builder who's ok'd by someone official (it can't usually be you).  And also, there's a time limit on your building.  So, while you're building they seem to ask you to just pay the interest but after their fixed build period is over (usually 12  months but sometimes 18), you're paying the full amount.  In addition, most of these will not cover the building of earthships or basically any home that isn't normal. 

We did decide to look into how much it would cost to get the Earthship Academy team to build us maybe just one livable room of our home, or the guest house and then build the rest ourselves.  Chris is supposed to be doing that investigation... Chris?  Hello?

So I started my spreadsheet.  I tried out a few scenarios for mortgages using various mortgage calculators and adding in monthly insurance and property taxes as my sister said was necessary.  I must be doing something wrong because my monthly payments just don't seem to come out as high as she and Robert-the-Prequal-Guy said they'd be.

So I left that temporarily, sharing it with my sister and asking her to correct my I-don't-understand-ammortization-and-I-don't-care mistakes.  I moved on to looking at land lot loans, because as cool as construction to permanent loans seem, it just didn't seem to be panning out with the companies I'd contacted thus far.  But none of the companies had any information that was actually helpful on their website!  Nearly no info on rates, or amount down, or if they covered raw land, or what their requirements were for utilities.  

So I looked a little more at the construction to permanent loans but ran into the exact same thing!  No info on rates, little on amount down, not much about raw/unimproved or improved land, nothing about if you had to have a certain builder/contractor, nothing about if they'd pay for an earthbound home...

Now, I hate the phone.  I really do.  But even I was frustrated that I couldn't call anyone because it was Sunday night.  When do they think people are likely to do this research?  During the work day?  Because... no.  Not that I don't think banking people deserve weekends, but at least have a little info on your site so I can figure out if I should even bother contacting you!

The spreadsheet is definitely not in a place where it can start telling me what the best financial deal I can make is.  I'm hoping that it can start doing that by the end of this week.  If there was someone I could hire to do this for me, who actually understands loans, I so would do it.  I do not trust myself to make this as accurate as it really should be.