why lending company does not want to finance newly flipped house?

Asked by Chong, Phoenix, AZ Wed Jul 15, 2009

we found this house( newly renovated) in perfect condition with swimming pool, this is used to be an old house and bought by construction company and now it's on market. our offer got accepted but the mortgage company (big bank) does not want to finance , their reason is the house is too new (3 months). we are puzzled???

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Shel-lee Davis’ answer
Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Wed Jul 15, 2009

Find another bank. Every lender has their own requirements for "seasoning" which Mark explained below. If you need a referral to someone who can help you out, feel free to contact me through my profile. I work with several lenders who do not required seasoning, however, I will have to see if they lend in Arizona if you are buying in Glendale Arizona and not Glendale California.

Please note, sometimes the seasoning requirement is not the bank's but the mortgage insurance company's. Also, FHA requires that the prior owner has held title to the property for a minimum of 90 days before they will lend on it. So if you are doing an FHA loan, that could have been a problem, although, I do not see how it would apply if, as you say, the construction company has owned it for 3 months.

I have a philosophy in life: Don't accept NO for an answer when you know it is the wrong answer. So keep asking the questions and you will find the lender to do your deal. Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
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Mark W. Mill…, , San Diego, CA
Wed Jul 15, 2009
Some lenders have a "seasoning" or "aging" policy. You can learn more about this by doing a search on the terms "mortgage" and "seasoning". Sometimes this seasoning period can be as short as 90 days. One option for you might be to negotiate with the seller for a longer ecsrow period that will cover the seasoning time. It depends on the seller. They may want to turn the property as quickly as they can and not wait, but on the other hand, the seller may run into the same problem with another buyer unless that buyer is paying cash.
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