While the requirement to take care of peeling paint may seem to you like a negative thing, look at it on the other side: What you are being asked to do is for the benefit of your property! If you have peeling paint, the top protective layer of protection on your property is deteriorating. It will not only improve sales value, if you decide to sell soon, it is something that needs to be done to keep ypur underlying property from deteriorating.
---and Jefferson has a very good point as well. Find out what it will cost. Get several estimates and get the jobdone.
It will be money well spent whether you are re-financing or not!!
Hope that helps.
Granted - I may be totally talking out of turn here. BUT ... I have some experience as a home owner and have done ALL my own trim painting - except for one small section so high up that I hired a guy for $200 for that.
Is it only the trim that's a disaster or paint over large areas of wood shingles, etc? Even if it's "a lot of stuff" you would be truly surprised at how much work you can get done with a couple of guys that you get from Craigslist - and you - all working together. Contractors are starving for work - especially in your area. I bet that everything you are facing can probably be done for $500-700 in 2 days time.
Would you please provide the full info on all that "needs to be done"?
I am somewhat concerned that your lender DID not explain all the requirements for FHA.
Have you thought of just going Conventioanl Refi? It is much easier but the rates may not be as appealing or you would have to qualify the 'cost' of refinancing this way as opposed to FHA... I sincerely hope you call your lender! - Good luck and best wishes on yor financing.
Brooke Rhodes - Certified Distressed Property Expert, CDPE, Realtor, RECS.