Can't cope with buying, can't cope with renting
November 22, 2011 6:09 PM Subscribe
I need help getting a mortgage on a property that needs minor repairs.
I'm currently under contract on a house and it's a big mess.
Problem #1: The appraisal came back with a value higher than what I would be paying for the house, but with conditions. The conditions were minor repairs they wanted done. I wanted to negotiate with the seller to do the repairs, or (if that didn't work) pay to have them done myself. The bank said that even if the conditions of the appraisal were met, they still wouldn't make the loan. (Huh? Can someone explain this to me?)
Problem#2: My realtor advised me to go with a renovation mortgage on the house. I really, really, REALLY don't want a reno loan. However, I really want the house and don't see any other option. I'm in process with Wells Fargo for a conventional renovation loan (not FHA203k or FHA203k Streamline). I was hoping this would at least save some red tape by not doing the FHA part of it (I don't want the house to have to meet FHA requirements), and was advised that since I'm putting 20% down, it wouldn't make sense to do FHA203K since they require mortgage insurance on a 30-year loan no matter how much you put down.
Problem #3: As part of the renovation loan process, I had to get bids for the work to be done from a licensed general contractor. I only wanted bids on the items that were called out on the original appraisal. The contractor added a lot of "recommended" things to the bid--i.e, if I want to replace the water heater instead of just moving it, it will cost $X more. That would be well and good, but the contractor sent the entire thing including the recommendations to Wells Fargo. I find this completely unethical, since now their appraiser will be looking at those items to make them a condition of the loan.
I know a lot of people will want to tell me to just walk away from the house. That's a valid option, but the problem is that I know I will face these issues on any house I am interested in--the types of houses that I like in my price range are ALWAYS going to need at least some minor work. I paid for a home inspection on this house and there were no major problems, or else I wouldn't have gone forward.
I have good credit (high 700s) and am putting 20% down. I just want a regular, 30-year fixed rate mortgage. Is there some option I haven't considered? How likely is the Wells Fargo appraiser to require all the crazy "recommended" crap that the contractor suggested? If you bought a house that needed minor (or major!) work within the past year, how did you do it? (The time frame is important, because appraisal underwriting never used to be this picky.) I can't help but think that the only way to buy the type of house I want is with cash.