You can’t buy this house

Everybody wants to buy a bargain Metro Detroit home.  Of course some of the best deals are in Metro Detroit area foreclosures.  But there may be an issue with that foreclosure that will stop you from buying it!!!

I was out looking at Farmington Hills foreclosures with some first time home buyer.  We walked into one.  It had outdated cabinets, needed painting throughout, needed carpeting throughout the house.  But it was missing the furnace.  As a first time homebuyer you can’tbuy a home without a furnace if you are getting a FHA mortgage or a conventional mortgage.  A lender will not loan you the money to buy the home because it needs a major part of of the house.

A lender (especially in this market) will not loan money on a home that needs significant work.  Here are some of the items that a bank won’t loan you money on home.  This is just some of the reasons I have seen Michigan mortgages turned down.  Some lenders may make an exception but here is a general idea of what is not acceptable

  • bad roof (if they can see curling or missing shingles
  • broken or missing windows
  • broken, heavily damaged (bent) or missing garage doors
  • Missing drywall, studs in the wall showing
  • a majority of kitchen cabinets gone or no kitchen at all
  • no furnace
  • no hot water heater

Basically if the bank can see something in the appraisal pictures that they deem unacceptable they won’t loan on the Michigan home.  Or if the appraiser notes that something is missing or damaged.  They don’t want to end up with a home that is not in market condition.  If they got aFarmington Hills home back in foreclosure they don’t want to put money into it to sell it.

Well you say, let’s just have the appraiser not mention it, or not include the deficiency in the pictures.  That is fraud.  That could lose the appraiser his license, that could stop theappraiser from doing business with that bank if caught.  It could put the mortgage loan officerappraiser, and you in jail.  It is fraud.

The only way to buy the house is to pay cash and have no mortgage for the Metro Detroit real estate.  Or to put your money out before you own it and pay for the repairs.  If anything goes wrong with the sale you may have invested money into a home you don’t own.

So if you are a first time home buyer and looking at Wayne County homes for sale skip the homes that need major work that will be turned down by mortgage lenders.  Unless you have cash to buy them or willing to take a chance of losing money of fixing the problem before you move in.

There are a few rehabilitation loans out there that may be an exception to this article.

I hope this explains why banks won’t loan on damaged homes and homes that have major items missing

Russ Ravary

Your Michigan realtor serving Oakland County, Wayne County and Livingston County

 

My quote of the day is:

Whatever course you decide upon,
there is always someone to tell you that you are wrong.
There are always difficulties arising
which tempt you to believe that your critics are right.
To map out a course of action and follow it to an end requires courage.

~~~ Ralph Waldo Emerson ~~~

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