Step 2 – Financing
We didn’t need a loan to purchase the building because I was able to scrape up the $1 purchase price. However, we did need financing to cover the cost of our renovations. We had gone through the pre-approval process for the loan and thought we would be good to start construction as soon as we closed. As they typically do, the bank ordered an appraisal as part of the financing process. On our end, we started asking contractors for bids to ensure the renovation was within our budget. The appraisal came in good shape. The bids? Thanks to the current construction boom, not so much. I covered that little setback more extensively here.
Since we weren’t looking to spend more money, which the appraisal wouldn’t support, we had to go back to the drawing board. Literally. Luckily we know a few people and redesigned the building to give us the same feel, but at a lower price. It meant losing some things we wanted, but they were less important than the overall price. We were able to get the numbers in line. Plus a nice grant from the City of Hagerstown to make it all work. Perfect–next step!
Well not exactly. Since we changed the design, the bank needed the appraiser to re-review the design to make sure the overall value didn’t change. Plus since it had been several months, we had to send the updated financial information to the bank. Fortunately, everything looked good and we could proceed.
Total time for Step 2: 4 months–we closed on the loan over 1 year after our bid was accepted.
Stay tuned for Step 3 in my next blog.