Financing in 59701>Question Details

Red_as_copper, Home Buyer in Butte, MT

Second-time homebuyers stuck in a 203k streamline situation. We had a home inspection, and were told we'd never get a conventional fha loan.

Asked by Red_as_copper, Butte, MT Tue Nov 23, 2010

Inspector said roof and 4 decks needed replaced & that an appraiser would indefinately call them out. Our realtor, desperate to save the deal contacted our loan officer who recommended a 203k loan and referred us to an out-of-town specialist. Long story short, we had a closing date of Nov.24, but our appraisal never got ordered until I could find some contractors to give bids & we just got the appraisal back today (Nov.22) - it never identified any roof or deck conditions, said both were "fair". I feel extremely misled by the inspector and realtor & I'm stuck in a loan I didn't even need. Not to mention, it took so long we had to get extension f/seller which is up Dec.12. It's winter here and there's 2 feet of snow. Bank wants work to start in 30 days of close and be done in 4 mos - anyone know if we can get an extension? It's Wells Fargo. Is there anything I can do short of walking away; I feel lied to and trapped.

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Just because a lender is approved by FHA does not mean they will offer the standard 203K or the Streamline K. You need to work with FHA lenders in Montana who have prior experience in funding renovation loans under the 203(K) guidelines.
0 votes Thank Flag Link Tue Jul 26, 2016
If actual appraisal states no needed repairs, why can't your lender/LO just flip you into a standard FHA loan? Should just be a simple matter of generating and signing new loan docs.
0 votes Thank Flag Link Tue Nov 23, 2010
I am a big fan of the 203K loans because they give buyers the money needed to make repairs. Deck and roof replacements are big ticket items and a lesson learned here is that regular home maintenance goes a long way to extending the life of these components. A leaky roof can cause more damage in the long run so its better to be safe than sorry.

The inspector may have overstepped by "assuming" what the outcome of the appraisal would be however, at the same time, looking ahead and having a plan B in place isn't all bad either.

I hope this helps.

Stacy Carter
Associate Broker
Home Appreciators Team at
Better Homes & Gardens Real Estate Metro Brokers
0 votes Thank Flag Link Tue Nov 23, 2010
Hello Red as copper,

Appraisers, even FHA appraisers, are not home inspectors and are only looking for 'obvious' defects and depending on the appraiser's experience level & the weather conditions at the time (if everything was covered in snow) he may not have seen the roof condition & might not have walked out onto the decks. Another reason could be that since the lender knows this is a 203k loan because they had the work bids you provided, the appraiser may not have had to note these conditions since they are to be repaired (on a 203k loan, the appraisal is typically for the home value after repairs- if not, the lender may require two appraisals -which will be an extra cost to you).

What did the licensed contractors that gave you bids say? Since they are considered the specialists, is it their opinion that the roof and decks are satisfactory? Would they 'certify' (there is a fee involved with the certification but it is much less than the cost of replacement) the condition of either the roof or decks for a min. of two years?

Since you have until Dec. 12, and IF the work really does not need to be done, you should have no problem foregoing any unnecessary repairs (once you get the cert.s) and switching to a regular FHA loan; but, as Suzanne said, if it does need it, you are better off doing it now than later.

Best of luck,
0 votes Thank Flag Link Tue Nov 23, 2010
I got a 203K loan when I bought my house. And yes, you can get an extension on the work being completed, I believe up to a year. Remember, the bank officials are probably nowhere you geographically, they don't know the weather conditions in Montana. Sounds like it's impossible to replace the roof until spring anyway.

FHA usually assigns someone to oversee the work in increments. The contractor does a part of the work, the inspector comes in, sees that the work was done properly and then releases a portion of the rehab money to the contractor, who then starts the second phase of the job. It's actually quite nice becasue it relieves the homeowner of having to deal with the contractor directly and ensures the job is done right.

I don't know why your appraisal was not ordered in a timely fashion, expect that I know 203 K loans take longer to put together, you have to have repair estimates and an agreement in place with the contractors prior to closing. I don't know whether you can change the type of loan now, and, honestly I don't know that you would want to. The roof and decks sound as though they need to be repaired and/or replaced anyway. It would not be safe for you to live in a home that is in poor condition, the roof could cave in or the decks could collapse. So, unless you have the money to have those repairs done yourself, I would go ahead with the 203K loan, get the work done.
0 votes Thank Flag Link Tue Nov 23, 2010
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