Will lender provide financing on a house w/o inspecting interior?

9 Replies

Hypothetical question - I own a house free and clear and would like to take out a home equity or mortgage to fund an investment property purchase . However, due to an ongoing tenancy issue an interior inspection for the appraiser would not be permitted . Will any lenders lend without seeing the inside of a house ? If so , what's the typical max LTV on something like this ?

Frank,

Great question. I will preface this answer by stating that my experience is exclusively in investor, non owner-occupied properties.

The lender that I worked for prior to starting Vaia Capital had a ‘sight-unseen' product, in which the max LTV was 50%. Again, note that this was for investment properties.

So, the answer to your first question, ‘Will any lenders lend without seeing the inside of a house?’, is yes. However, that product seems to be rare, as most lenders will want an appraisal done on the property.

Warm regards,

Michael

Hi @Frank S. typically a lender will require an appraisal, but not an inspection.  Appraisals are either 1. drive-by or 2. invasive (my terms).  The best way to know covertly which one a lender uses in my area is by looking at the lender fee for appraisals -- drive-bys charge $100-225 and full-scope appraisals around $450-575.  Otherwise I can always ask the lender if they have a loan based on a drive-by appraisal, and explain to them that the tenant is a delicate flower, which they usually understand.

Loan's in my area that typically use drive-by appraisals are commercial loans from commercial banks. Banks that typically do mortgage loans (read: loans for the secondary mortgage market, like a conventional, FHA, or VA loan) tend to use full-scope appraisals for most finance options.

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@Frank S. most heloc's only require an AVM (basically like a Zillow value) or at most a drive-by appraisal (exterior only). You need to ask that question to the bank/lender directly. If the property is an investment property, the max LTV I have seen is 75% and it needs to be a first position lien.

Conventional mortgages require a full interior & exterior appraisal, unless you qualify for an appraisal waiver granted by the automated underwriting submission. A waiver is unlikely for an investment property cash out refi due to risk. Waivers are most commonly granted for primary residence, rate/term refinances, where the LTV is 80% or less and the property value used is in line with a previously used value. For example, someone buys a home for $100K and used Fannie Mae Desktop Underwriter (DU), then a year later they refinance and the loan officer inputs $100K for the value into DU. DU recognizes it, and grants an appraisal waiver.

Hope that helps.

If doing a refinance  the lender for the appraisal will require access to look at the inside of all units. If your ongoing tenant issue is such that they won't permit an appraiser to go into the unit then you have a lot bigger problems my man. Just tell your tenant what you are doing. If they are selfish enough to not let you have this happen I would take some next steps and simply "not renew their lease". If it's a month to month lease they are on then you don't have to "evict" them, simply give them 30 days notice that you are not renewing their month to month lease. If they fight you on that and won't move out, then evict.

Originally posted by @Frank S.:

Hypothetical question - I own a house free and clear and would like to take out a home equity or mortgage to fund an investment property purchase . However, due to an ongoing tenancy issue an interior inspection for the appraiser would not be permitted . Will any lenders lend without seeing the inside of a house ? If so , what's the typical max LTV on something like this ?

An investment property cash out refinance has about a 0.001% chance of getting a Fannie or Freddie appraisal waiver, sorry.

Hard money Joe charging 14% and 5 points might go for it....

@Frank S. Only bank that would do this is a local bank. I’ve used a local community bank who does this, but any conforming loan will require interior access.

@Chris Mason

Ok makes sense . So a mortgage is out of the question but from the other responses it seems as if a line of credit most likely won’t require an inspection . That’s probably the route I’ll take