Posted on: 29th Aug, 2010 11:07 am
We are in the process of buying our first house with an FHA-backed loan. The house was built in 1910, was a foreclosure and is bank owned. The inside is in pretty good shape, no damage to any walls or flooring (except one room in which the carpet has been cut out but there is hardwood underneath), the windows and doors are brand new. There is a crawlspace but everything looks good there. It has been winterized and we have not had our inspection yet so we do not yet know in what condition the electrical/water/gas is in, but we don't expect problems there. The seller is paying to have utilities turned on for 24 hours so we can have our inspection.
What worries me though is the outside--it does need to be painted and the back side of the house has damaged wood siding. It appears to be just the siding, underneath is solid and there is no evidence of termites or other pests.
[img:0fc546fb6c]http://farm5.static.flickr.com/4102/4918324838_c5e6fa2b2c_m.jpg[/img:0fc546fb6c]
Will this damage cause FHA to deny our loan? We know that it needs to be fixed, and we will be fixing it, but I'm wondering if the sale can be denied or if FHA will force us to fix this before closing.
Thanks[img][/img]
What worries me though is the outside--it does need to be painted and the back side of the house has damaged wood siding. It appears to be just the siding, underneath is solid and there is no evidence of termites or other pests.
[img:0fc546fb6c]http://farm5.static.flickr.com/4102/4918324838_c5e6fa2b2c_m.jpg[/img:0fc546fb6c]
Will this damage cause FHA to deny our loan? We know that it needs to be fixed, and we will be fixing it, but I'm wondering if the sale can be denied or if FHA will force us to fix this before closing.
Thanks[img][/img]
Hi dt,
When the appraiser appraises the property, he would mention the damage in the property in his report. This will also lower the value of the property. Thus, you would qualify for a lower amount mortgage compared to what you might have received if the property would have been in good shape. FHA might ask you to fix the property before they approve the loan.
Thanks
When the appraiser appraises the property, he would mention the damage in the property in his report. This will also lower the value of the property. Thus, you would qualify for a lower amount mortgage compared to what you might have received if the property would have been in good shape. FHA might ask you to fix the property before they approve the loan.
Thanks
I agree the appraiser will have to note it in the appraisal and probably complete the appraisal "subject to completion" of the repair. It would then be the underwriter's decision to determine what options exist. It may be a good idea to have your loan officer run the scenario by the underwriter before moving too far forward. You may be able to do an FHA 203B with repair escrow or an FHA 203K loan.
Good luck and congratulations on your first home!
Good luck and congratulations on your first home!
