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At
this point of the
discussion, I want to point out a very important issue that
could cost unsuspected new home
owners thousands of dollars. It is important to know
this information...before taking out a loan.
Review
the definition
of equity
again,
and pay careful attention to
the part where it lists "mortgages, liens, etc." .
The
only lien that should be on your
home, after all is said and done, is your first
mortgage lien and that's it.
A
deed search is always done before you purchase your
land and just before closing your permanent mortgage to make
sure that the property is free and clear of any other liens.
There
have been instances when new construction home owners have gone
to close the mortgage on their home and found that there have
been other liens attached that should not have been.
If
the lien is valid, your lender may force you to pay
it off before closing on the mortgage.
However,
if the lien was put on the property, either by error or by
fraud, to get off may take: paying it, negotiating with the
person owed the debt, filing a complaint with your state's
Attorney General, or going through the legal system to have the
lien removed.
The
bottom line is, your lender may force you to get those "other
liens" off before you can close on your property. And
that could end up costing you extra thousands of dollars and
possibly your new home.
It
is up to you to keep "other liens" off your
property!
Our
Story:
The
above scenario happened to close
family of ours and they were completely devastated by the
results. Not only did they nearly pay twice for their new home,
which affected their financial wealth, but they also paid in
their emotional and physical health from the stress that was
created.
After
seeing what our family went through...
...my
husband and I came up with a plan.
We
decided that when we built our home—we
would be the ones to pay any and all construction
bills. It was our loan that we would eventually be
paying back to our lender and we were not about
to be left with extra liens when the time came for
closing our home.
Controlling
Your Money
I
ask you this: Why leave someone else...someone you
may barely know, in total control of your money? This statement
doesn't mean that you
neither can't nor shouldn't trust
people, it is just makes good sense for you to be in total
control of your own money.
OUR
Construction PAYMENT SYSTEM:
Here's
how we stayed in control of our money:
While
researching prospective lenders, we made it clear, right from
the beginning, that we wanted to make
sure every dollar would being spent where it was
allocated.
The
only way we felt comfortable our money would be going to the
proper place was if we,
meaning either my husband or myself, paid all the bills
associated with the construction of our new home.
We
knew that our Lender, General Contractor, Sub-Contractors, and
material suppliers would have to agree to and abide
by the following plan if they were to be a part of
our team.
A
checking account would be opened for all construction payment
purposes. In addition, any check written need
approval from us and our lender before dispersement.
All
checks written from that account would require at least two
signatures on it (one from either my husband or
myself and the other from the loan officer) for the check to
be valid.
Our
General Contractor would be required to submit all
construction invoices to us explaining exactly what
we were paying for before any checks would be written.
All
construction invoices would be paid by check with a statement
stamped on the back that would constitute a legally binding
contract for a "no lien" agreement. (When
the person or company the check is made payable to endorses
the check, they agree, and are bound, to the contract written
on the back of the check and are then bound to that contract.)
I
would be write the checks and reconcile the account because
I had more time to devote to it than my husband.
Please
"BeWISE": If you
choose to follow our plan,
make sure that you research the "No Lien Contract"
requirements for your state and that the language to be
stamped on the back of your checks fulfills the
requirements for a "no lien contract"
governed by the laws of your area.
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