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FHA Appraisal question???


1Quik7

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The wife and I are looking to buy a house that my parents own, it's a very good deal with a lot of equity being transferred. The snag we are running into is that they are trying to push an appraisal thru in the next week or so, however, our lender is telling us that we need to correct any paint issues...which there are quite a few on the exterior of the house. We have wood trim that is just weathered away and needs attention, but its a 2-story house and not really accessible areas. I think its way more of a job we can handle and in such short time I doubt we can find a cheap crew to fix it...I really don't have the extra money to throw at it, especially near the Holidays and buying a new house.

 

Does anyone know if that is actually something they will deny an FHA loan for? I was under the assumption it was for older homes with Lead based paints(ours is 1987)?

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Yup. You'll likely have to front 1.5x the estimated cost of the project (in which you'll have to have a contractor quote you for). The quote comes back at $1,000, you'll have to escrow in $1,500 to cover anything that comes up.

 

Welcome to FHA. They can do this for windows, roofs, paint, cat hair (kidding), etc.

 

I once had to put up $7700 for windows on a house. Did that shit myself for $2200.

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Yup. You'll likely have to front 1.5x the estimated cost of the project (in which you'll have to have a contractor quote you for). The quote comes back at $1,000, you'll have to escrow in $1,500 to cover anything that comes up.

 

Welcome to FHA. They can do this for windows, roofs, paint, cat hair (kidding), etc.

 

I once had to put up $7700 for windows on a house. Did that shit myself for $2200.

 

Exactly what he said. It is 100% up to the discretion of the appraiser that comes out and the underwriter that reviews the file.

 

If there is that much equity in the home and your parents are cool with it...you can adjust the sales price once you know exactly what your lender will require to hold in escrow so it comes out of your parents proceeds as opposed to your pocket. Once the work is completed and you get the funds released to you, you can simply give it back to your parents. Following me?

 

Thanks,

Marc

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Exactly what he said. It is 100% up to the discretion of the appraiser that comes out and the underwriter that reviews the file.

 

If there is that much equity in the home and your parents are cool with it...you can adjust the sales price once you know exactly what your lender will require to hold in escrow so it comes out of your parents proceeds as opposed to your pocket. Once the work is completed and you get the funds released to you, you can simply give it back to your parents. Following me?

 

Thanks,

Marc

 

Thanks for the advice, the only downside is we have already adjusted the sale price so neither my parents nor us will have to bring anything to closing, not sure we can adjust it that much more.

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Why are you using FHA if they are gifting you a ton of equity? The equity gift counts towards the down payment. Skip the bullshit of an FHA and get a conventional

 

I don't believe that's the case...I could be wrong, but Conventional still requires a higher down payment in almost every case. Even if it's 3% vs. 5%, it sounds like the OP doesn't have that extra 2%.

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I don't believe that's the case...I could be wrong, but Conventional still requires a higher down payment in almost every case. Even if it's 3% vs. 5%, it sounds like the OP doesn't have that extra 2%.

 

Many lenders allow a gift of equity as the down payment. It has to be specified with the lender upfront, fill out paperwork from both parties, and the appraisal has to come through ok. If your house is worth 200k, you could have a sale price of 180k, and the appraisal comes back at 200k, you have a 10% down payment. If the equity is over the untaxable limit, the parents will file their tax form on the gift and it goes against their lifetime limit of like $6 million. I know for sure that Quicken, Wells Fargo, and Chase allow equity gift down payments. A friend of mine just did one through Quicken with a 25% equity gift down payment

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Many lenders allow a gift of equity as the down payment. It has to be specified with the lender upfront, fill out paperwork from both parties, and the appraisal has to come through ok. If your house is worth 200k, you could have a sale price of 180k, and the appraisal comes back at 200k, you have a 10% down payment. If the equity is over the untaxable limit, the parents will file their tax form on the gift and it goes against their lifetime limit of like $6 million. I know for sure that Quicken, Wells Fargo, and Chase allow equity gift down payments. A friend of mine just did one through Quicken with a 25% equity gift down payment

 

That sounds intriguing, but I would also assume that they'll only take a certain percent. So in your example, they'd only take 70% of the 20k, not all 100%.

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That sounds intriguing, but I would also assume that they'll only take a certain percent. So in your example, they'd only take 70% of the 20k, not all 100%.

 

Nope. They take it all. Its a straight equity gift. Same as gifting cash.

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Many lenders allow a gift of equity as the down payment. It has to be specified with the lender upfront, fill out paperwork from both parties, and the appraisal has to come through ok. If your house is worth 200k, you could have a sale price of 180k, and the appraisal comes back at 200k, you have a 10% down payment. If the equity is over the untaxable limit, the parents will file their tax form on the gift and it goes against their lifetime limit of like $6 million. I know for sure that Quicken, Wells Fargo, and Chase allow equity gift down payments. A friend of mine just did one through Quicken with a 25% equity gift down payment

 

Correct. Freddie/Fannie allows any amount of gift funds to be used towards your down payment now. It used to have a limit but that all changed last year.

 

UGH...makes me sick when I hear people finance their homes through Quicken WF or Chase. So fucking expensive.

-Marc

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FHA is extremely strict, which has been verified by the poss above me.

 

FHA can be a great tool for borrowers that have bruised credit, higher DTI ratio's and limited funds. But, if you can go conventional I ALWAYS try to go that way because it is less expensive than FHA every time in the long run.

-Marc

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  • 3 weeks later...

UGH...makes me sick when I hear people finance their homes through Quicken WF or Chase. So fucking expensive.

-Marc

 

Literally, the worst. And typically poor service too.

 

I had a woman be referred to me by a real estate agent to get pre approved. She however was insistent on working with her "local bank". I asked the name of her LO, she didn’t know. She dropped her paperwork off with a teller.

 

Call her 2 days later to follow up, still no pre-approval.

 

2 days later, she said she will call the bank.

 

She came to me today, saying she called, and they had not even looked at her docs yet. :lolguy:

 

She left with her pre-approval in hand.

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Literally, the worst. And typically poor service too.

 

I had a woman be referred to me by a real estate agent to get pre approved. She however was insistent on working with her "local bank". I asked the name of her LO, she didn’t know. She dropped her paperwork off with a teller.

 

Call her 2 days later to follow up, still no pre-approval.

 

2 days later, she said she will call the bank.

 

She came to me today, saying she called, and they had not even looked at her docs yet. :lolguy:

 

She left with her pre-approval in hand.

 

I couldn't even get Chase to give me a preapproval on the last house I had and I was an employee of theirs. Went down to the credit union I bank at and was in and out with a preapproval in 20 minutes. Chase is pond scum, all of them.

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I couldn't even get Chase to give me a preapproval on the last house I had and I was an employee of theirs. Went down to the credit union I bank at and was in and out with a preapproval in 20 minutes. Chase is pond scum, all of them.

 

Nice.

 

But, remember you CR sponsored (Mark) and non sponsored (Me) bankers in the future. ;)

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Thanks for all the information...JP thanks for the gesture(turbo my wifes Kia)...we had a family friend paint the house and the appraiser was super cool and only here for like 10min.

 

And yes, the rents have the house under Chase, the "local" bank in their area...my Dad keeps claiming he's gonna get someone fired becuase they are so incompetent. LOL. Everything should be kosher..

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