Guys, I apologize in advance if this is not the right place for this question. Please move it to where it'd be better suited.
I have recently found a 4 BR/2BA property that will suit my needs of going back to school and renting out the other rooms perfectly. I should be cash flowing approximately +$500/mo. However, I have also found one problem though: financing.
This was my mistake, but I contacted Quicken initially to get an idea of what I could afford. I was pre-approved for 190k, and this number has only been dropping ever since. Since this has been an issue and it appeared they may have absurd closing costs, I have begun looking for other banks, but at this time- an FHA loan is looking like the most probable form of loan for this property.
The only issue after financing then is that I am concerned that the garage may not meet FHA requirements. There is a slight sag to the roof and it has supposedly been that way since construction (Approx 40 years). It will need to be fixed at some point costing approximately 2-6k, but I am assuming it would make it as-is another 2 years.
Has anyone had a similar issue? How did you resolve it? Was it an issue for FHA financing?
Any and all help in understanding this issue will be greatly appreciated! Thank you!
Have you considered an FHA/203K loan as an option? You can get up to $35,000 for renovations/upgrades/improvements. You will just be restricted to using approved contractors.
Yes, sir! We are looking into the possibility now, but would like to close sooner than that if possible.
@Elijah Miller I've used FHA loans twice before, and in my opinion the inspectors used by banks for FHA loans seem to be hit or miss as far as what they will or won't call you on. The first time, the inspector was especially nit-picky, the second time I think the inspector was there for a grand total of 8 minutes and noted no issues. The biggest thing to look out for is wood-rot on the exterior. If you truly believe that the garage is going to be a deal-breaker for the FHA loan, why not see if the seller is willing to fix it and add those costs into the purchase price, so that it's fixed before you purchase the place? I know @Robert Higdon mentioned 203k loans, however I'd be leary of this option because this is a fairly complex, time intensive, paperwork strewn option (search BP for post's by other on their experiences with 2032k loans) and do you really want to go through all of that for 2-6k of work that needs to be done?
@Kevin S. , the seller has made it clear that they would not want to repair it prior to sell. This will be my first home purchase, so looking at the FHA guidelines I am not sure what to make of the garage. The guidelines say that they are looking for, "Safe and Sound", as well as 2 years prior to major repairs needing to be done. With a 40 year standing history for the garage and roof as-is, I would look at it and guess it could survive another two years. I just don't know if the appraiser will look at it the same way.
There are no history of termites, and on inspection, we couldn't find any signs of wood damage by insects, water, or otherwise.
As you mentioned, the 203k would be a last resort for those very reasons.
Save yourself the trouble and don't use quicken loans. Some appraisers might say something about that, some wont. If it is sagging and it is not due to any health or safety issues then it will be FHA compliant.
@Elijah Miller 2-6k... ive had saggy roof problems most of my life. Find a buddy after watching some youtube videos. Rent some roof jacks. Or buy some if you know anyone else interested in splitting the bill. In the off chance you weld or have a friend that does they are super easy to make. Just take it slow and easy. 1/8" every other day or two.
@Suny Capezzuto , I'm not planning to at this point. There is a small portfolio lender locally that I would like to get some rapport started with and this seems like it'd be a good way to do that. Sounds good! Thank you for the opinion regarding the matter! That bank has also agreed to do a conventional that will fit my DTI profile, so the issue may be remedied for now other than there's an additional 2k coming out for closing costs that the other bank did not require.
@Andrew Cornstubble I will keep that in mind! There is a good chance that I will consider fixing it myself if the conventional loan goes through.
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