we're getting a seller's concession to cover closing costs on a house. but the inspection turned up several issues that need to be addressed immediately, chief among them the presence of asbestos in the cellar. the sellers offered to lower the sales price by $5000 to cover its removal along with some other repairs revealed by the inspection. we planned to take out the same loan so we'd get back the $5000 to make the repairs. our mortgage broker is saying the lender will not allow this. we can reduce our loan by $5K, which is great, but that doesn't give us any money up front for the asbestos removal. after the downpayment, plus moving costs, we won't really have enough to make these very imporant repairs. i've read about other people financing repair costs, so why are they refusing?
2006-08-23 10:01:17 · 8 answers · asked by Chris G 1 in Business & Finance ➔ Renting & Real Estate
What they dont want to do is give YOU the cash at closing. Instead, you need to write the agreement so that the $5,000 stays in the escrow account. Then, you'll need a licensed person to remove the asbestos, and when it is done, the escrow agency issues the check directly to them--- but not all companies will do this-- some contractors expect to be paid up front.
Don't lower the sales price. Just keep it the same, with the $5000 "allowance towards repairs" or some such wording. If you've got some cash to fix the asbestos, you can turn in your receipts for materials and get the escrow to pay you back the $5K...there are other ways to work this.
2006-08-23 10:11:57 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It sounds a little like the state of the house is part of what has made it available to you. if i make that assumption then you should bear in mind JokerKid's advice but remember that a house with no issues will probably cost a lot more. In a sense ALL money upfront is capital raised against the debt. This means you will have increased the value of the house due to removing the issues. A lender should be able to value the house with the repairs in mind and forward the funds. however things are tight and they might have you on the borderline of approval as it is. I would look around for another approver just to strenthen your negotiating position. Also consider lengthening the term rather than increasing payment.
Another option is to defer some of these issues; lock away 5000 in a term investment (a secure one) and lock up the cellar. Do things as you can.
2006-08-23 10:20:12 · answer #2 · answered by slatibartfast 3 · 0⤊ 0⤋
Typically a credit that is issued from the seller can be applied to Non Recurring Closing Costs (NRCCs). This can be up to 3% on 100% financing and 6% on most other loans.
(ex. You buy a home for $100,000 and are financing $100,000 you could receive up to $3,000 toward your closing costs.)
If the NRCCs do not exceed the amount being credited the remaining money should be used to buy down the interest rate.
Sometimes the funds can be held in escrow as a holdback to complete the repairs. Check with your realtor and escrow officer to see what they have done in the past.
The only other way to get full credit for the repair is to have the repair completed prior to Close of Escrow (COE).
If you do not have enough money for the move, there are loan options which can allow you to finance up to 107% of the purchase price. Please note these loan options will have higher rates.
~Danke Schoen
MrDankeSchoen@yahoo.com
2006-08-23 10:23:38 · answer #3 · answered by mrdankeschoen 2 · 0⤊ 0⤋
Was there a disclosure in the contract pertaining asbestos? The seller should have taken care of this, before putting on the market. The banks tend not to lend money on anything that has asbestos problems.
2006-08-23 10:08:09 · answer #4 · answered by skyeblue 5 · 0⤊ 0⤋
Seriously... Back out NOW!
Trust me on this one, there are going to be so many expenses coming up on this home it is going to break your will. Fixer uppers are the way to go if you have a bunch of money sitting behind you that you are willing to work with but you've already indicated this isn't the case. Find another house... You won't know better to thank me but if you buy this house you are going to be wishing you took my advice.
To answer your question... Some lender will lend up to 110-125% of the properties appraised value. 123loan.com is one of them. I think DiTech has an equity eater program as well.
2006-08-23 10:05:51 · answer #5 · answered by Du Hast mich? 3 · 0⤊ 0⤋
Stay Away. You need to have equity in a house to take out an additional loan of the type you are talking about, which you won't have right away.
2006-08-23 10:07:46 · answer #6 · answered by Anonymous · 0⤊ 0⤋
because you need a constrcution loan and your loan officer may not be specialized in construction loans. And there is 103% financing avaliable as well if you like i could look for some thing for you but i cant promise you any thing. my number (909)390-9171 ask for richard.
2006-08-23 10:47:20 · answer #7 · answered by business creature 2 · 0⤊ 0⤋
you must already be in escrow, have the owner fix the repairs himself, that's what the inspection is for, don't accept the lower price, accept your original offer but have the owner make the repairs, this is what escrow is for...hope this makes sense
2006-08-23 10:07:26 · answer #8 · answered by DodgerBlueFan 4 · 0⤊ 0⤋