[Cob] Cob financing??? and rant

[spiritpath n/a]

hello all~
    i just settled on 17.43 acres in Southern Virigina.   i put $20,000. down and financed the rest. Asking price was $65,000.....buying price was $57,000.  it is zoned agricultural, but is 95 plus percent mixed deciduous forest.  there is a small clearing of about 1/2 to 3/4 acre where i plan to build.  my rate is slightly higher than the going rate of between 7.5 and 8%.  mine is 8.25% over 15 years..  there are NOT too many places that will finance "raw" land  (on the east coast anyway) without some sort of "man-made" mess on it.  Farm Credit of The Virginia's was who financed the land for me.  they are a nationwide company that is a co-op type where you are buying shares in it.  they also loan on farms (as the name implies) and farm building.  they can do "residentual in certain circumstances but i dont know the details.  in Virginia (i am in maryland so this information is strictly from my own "investigation") you are required to have your property pass a "perk" test if you
 intend to build a "dwelling" on it in the future.  the cleared area passed and was approved for a 2 bedroom home.  even though i do not intend to build a septic system (i am going with composting toilet for black water and greywater system for all other drainage), i had to get the land to pass this test and made that a contingency on my purchasing it.  if it did not pass, i got my money back and the deal to buy it was null and void.  when you add a "contengency" to a contract to buy land, then you have alot more folks working to try to get those contengencies to pass than if you simply plunk your money down without them.
    there are "creative" ways to finance land.  sometimes (this is true in a lot of raw land cases in the mid-atlantic area of the east coast) owners will "finance" it by taking back a mortgage on land they already own.  sometimes you can do a combination of owner finance (for downpayment if you dont have one large enough) and a company like Farm Credit for the balance.  then you are stuck with two mortgages, but the largest will take presidence if you ever dont make your payments and they have to sell off the land to get their money back........in other words, the largest chunk of the sale will go to the company that financed the bulk of the mortgage before any goes to the sellers who take back a small mortgage for a downpayment amount....
     here on the East coast, it is very difficult to get alternative building, such as cobb or strawbale, approved or financed.  i wanted to do a cobb home....then i thought of a strawbale/cobb combination.......even with that combination it will be difficult to get it approved unless the roof is self-supporting, with "infill" walls.  since that is going to take forever, i decided to go with a small stick built cabin with composting toilet and greywater system (which will shelter me as i build the alternative) and once that is livable, i will build a "guest-house" (and call it a "farm animal" building, which doesnt require a building permit). that way, i have my cobb/strawbale house to "show" the building inspectors (should i decide to show them), i have NOT violated any building codes and i can still "live-in" the cobb/strawbale combo house with none the wiser.  maybe i will help educate those that are stuck in the rut of thinking that alternative housing techniques are "unsafe".  i
 can also remove the walls of the cabin over time and replace with cobb or strawbale. using your imagination and thinking out of the box really is required here on the east coast.  i always thought that "alternative" housing was easier to get approved west of the mississippi than here.....was i wrong?
    thanks to all who are posting on these "alternative construction" problems.  we really do need to keep pushing the envelope if we have any hope of changing minds.  it is often difficult to keep pessimism out of our lives and cry about the problems, but if we are going to be real "pioneers" to a cause (environment or simply personal choice) we must expect set-backs and have a positive mind-set.......we can overcome the problems and road-blocks put up in our path.
   
  peace and light and simplicity~
  terry

Leslie Moyer <Unschooler at cccexpress.com> wrote:
  

David Boyer wrote:

> Tried to work with an "organic vision" realtor in another county who effectively dismissed the whole idea of cob construction permitted because:
>1. We will need 25% down payment to purchase bare (agricultulturally zoned, which is what we want) land in Oregon. 
> 
>

I think this is pretty much standard practice among lenders--I don't 
think it has anything to do with the price of land in Oregon, per se. 
We were able to find one local (Oklahoma) lender who only required 20% 
down, but with a higher interest rate. Interest rates, by the way, are 
also higher for vacant land--our rate is almost 2% higher for vacant 
land than if the land had a house on it and it was, therefore, a home 
mortage loan. 

There were a couple of lenders who would loan a higher percentage on the 
land if we began a construction loan at the same time. We weren't ready 
to begin building yet, so we didn't want to go that route. 

You might be able to find a lender who would lend on a cob....it can't 
hurt to ask. (I say, blithely, knowing it isn't ME making 100 phone 
calls to laughing potential-lenders. ) I wouldn't take the realtor's 
word for everything....he/she benefits when he/she closes the deal so 
he/she wants the quickest route to that sale. I called 40 different 
lenders and got 40 different answers.

The only other suggestion I have is to see if the land (and your plans 
for it) would qualify for an agricultural-land set-aside program. That 
is, if you buy prime agricultural land and you are going to *keep* it as 
agricultural land, there may be a land preservation organization you can 
work with to assist you in the purchase. 

Our land didn't qualify (because it is heavily forested), but this 
organization would have been our best-shot at a lower-interest loan: 
http://www.farmcreditloans.com/. I don't know what the equivelent 
organization is in your state, but it used to be called the "Federal 
Land Bank Association" so I assume there is an Oregon office that's 
similar. Even still, federal laws wouldn't allow them to lend more than 
20 or 25% (I forget which), but we would have qualified for a 30 year 
loan on it, making our payments much more reasonable.

Good luck! I know it's a tough spot to be in!

--Leslie




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