Does anyone know of a mortgage that would allow you to add in the cost of a new roof?

Question

There is a house that we love and would like to buy, buy the house has already had an engineer inspection, and it needs a new roof....this summer. Does anybody know of a mortgage that would included the cost of replacing the roof (estimated @ $13,000). After down payment and closing costs, I would not be able to come up with $13,000 right away for a roof. Thanks!~

The seller is refusing to give any consessions or accept anything other than full listing price, despite the age of the roof and the fact that it needs to be replaced ASAP.

Answer 1

If the house comes in at a higher estimated value than the asking price, you can easily get enough loan on the first mortgage to cover the cost of a new roof. That's the same situation I was in when I bought my house. The house was appraised for $255K. I bought if for $180K and I got an additional $15K to replace the roof and make a few other repairs. (I could have gotten more!) The extra $15K came to me in the form of a check at closing. It is pretty common practice, I think. My loan is through Chase Manhattan Bank. Pre-qualify yourself for the initial loan. Have the house appraised. Then shop around for the best rate and let your potential bankers know you will need cash-out for a new roof at closing. You should find all kinds of lenders right now, as the housing market is moving so much slower than it was a few years ago. Good luck. Hope this helps.

FYI - I just read the article mentioned below about Cash Back being ILLEGAL. And IT IS NOT. Here is a direct quote from the article...

"Over the past three years I did about sixty deals that allowed buyers to get cash back. That is not an issue if a lender approves that but if they don't it is indeed an issue."

If you find a lender that allows the cash back option like Chase Mortgage did, you are not going to have any problems. What this woman got in trouble for was fixing mortgage deals when the lender did not allow for a cash back option. It's a totally different deal.

Answer 2

The current homeowners insurance should replace the roof if it has been damaged by hail or other issues besides age. it that doesnt work, have an appraiser do a value check on the property. If you can buy it for 13k less than the appraised value, get your loan approval for the full asking price. With a firm approval have the seller get the roof repaired and have the roofer collect out of the sellers profit at closing. The title company can cut a check directly to the roofer. FHA has a 203k loan available and I believe Countrywide and National City have a purchase/rehab loan too if all else fails.

Answer 3

As stated, there are several mortgages that allow for making improvements to a property - the FHA 203k being the most comman. FNMA has some products also, consult your mortgage banker. You purchase the house at the negotiated price and then a bid process is completed and you obtain a loan for the additional dollars needed to make the repair as long as the home will appraise for what you need. Not all repairs increase value dollar for dollar.

As for getting cash back at a closing, for the most part it is illegal and considered loan fraud. It is not comman place and if it is in the area, keep your eye on the news as someone will get indicted for it. It is a current scam out there and lenders are on the watch for it. Google the name Jill Lehn and read her story.

You can however, do as one of the answer says and if the property passes appraisal and the lender requirements, the seller can pay the contractor out of the proceeds of their sale - the money going to the contractor out of escrow and no money to the buyer.

Answer 4

Your question raises several thoughts. The new roof should be installed as part of the sale on the house. The appraised price of the house should reflect that it needa a roof and its value would be lower than if it didn't need the roof. If you are happy with the value and the price along with the inspection and appraisel the existing owner could raise the price $13,000 and sell to you at the higher value.pp

Answer 5

In some cases you are able to get "cash back" when you purchase a home. You would have to talk to your realtor about all the possible loop holes that you may proceed. Sometimes you might be able to lower the purchased price while getting a loan for the full value.

$200,000 home and the cost of a new roof would be $10,000. You might be able to get the loan for $200.000, but the purchase price would be $190,000. You would now have $10,000 or the buyer would be able to return the cash back for your new roof.

Talk to your realtor. Make sure you understand all the agreements prior to signing anything.

Good Luck.

Answer 6

FHA 203K Loan

Answer 7

These guys are right. FHA203K all the way. I can help!

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Marty