Home Buying in 01523>Question Details

Jessenia06, Home Buyer in Lancaster, MA

how do you buy a home with a failed septic if banks dont offer a loan?!?!?

Asked by Jessenia06, Lancaster, MA Fri Apr 17, 2009

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There are programs available other than a FHA203K. I would advise avoiding a 203K as it will cost the Buyer an additional significant amount of money to finance the property. It could cost them upwards of $10,000 out of pocket for a problem that wouldn't cost much more than that. If the septic is the only "rehab" issue, avoid a 203k. Also, 203k's are harder to qualify for. Mortgage Brokers have programs available whereas if the septic is actually still working, but just failed the Title V inspection, the Buyer can still get a conventional loan with a hold back in escrow at closing. They must provide the lender with a town approved septic design and usually one bid for installation. The lender will usually hold back anywhere from 1.5% to 2% of the cost of the septic and give the Buyer 30 days post closing to get the septic installed. The best benefit to this, the Buyer is entitled to the $6,000.00 tax credit! For details on this program call Jeff Pilon at Radius Financial. He can be reached at 781-742-6500 or toll free at 877-223-4800.
1 vote Thank Flag Link Fri Sep 7, 2012
Hi Sheri,
I bought a house last year in MA and did a septic hold back. I came across this answer and was wondering how the tax credit works. The previous homeowner actually paid the installer and was reimbursed the full hold-back amount, so I'm not sure what I can claim. Any ideas? Thanks.
Flag Tue Apr 5, 2016
You also have other options.

1) You could ask the bank (the seller) to seller finance the purchase, and obtain the rehab loan through them.
2) If this is an investment property, then you could bring in a partner to help you acquire the property..
3) Your could obtain either a bridge or hard money loan to buy and rehab the property, and refinance after having completed the rehab.
1 vote Thank Flag Link Fri Apr 17, 2009
Can someone recommend a loan like the Radiis one mentioned below... In NY?
0 votes Thank Flag Link Fri Jun 24, 2016
Use a septic installer that will install the septic and finance it until the closing. They can escrow the money and pay the contractor off the HUD statement. I have done this many times.
Cove Septic Service out of Sterling MA (978)422-6905 or mike@coveseptic.com has done many of these for my clients. He has been in business for almost 30 years and has the lowest prices around.

Any questions feel free to call/ text /email me
(508)5232676 cell
Web Reference: http://coveseptic.com
0 votes Thank Flag Link Sat Jun 27, 2009
The easiest way would be to have the seller install the system so there is no issue with the bank. There are certainly many banks that will finance a property with a failed septic system. It sounds like you may not have looked hard enough. Most banks will require an escrow of 1.5 times the cost of replacing the system.
0 votes Thank Flag Link Sun Jun 21, 2009
If you are looking for a mortgage person that can write that type of loan,(203K) call Gibraltar Mortgage, ask for Laurie. They are located in Leominster. You can talk to her and see if you like that option.

Gibraltar Mortgage (978)-840-3600

good luck,
0 votes Thank Flag Link Fri Apr 17, 2009
Hi Jessenia,

Deb is correct about the 203K. That was the rehab loan I was mentioning. Cheryl Leblanc at Wells Fargo does Handle 203K!

Christa Jaillet
0 votes Thank Flag Link Fri Apr 17, 2009
Actually, you may want to look into a mortgage loan known as a 203K.  This type of loan allows you to fund the money for repairs, such as the septic into your mortgage, Lancaster is a great town, hope you are able to put the deal together. Good Luck
0 votes Thank Flag Link Fri Apr 17, 2009
the bank is not willing to fix the system, the house is listed for 90,000 and worth far more, i can get my hands on 50,000 cash but thats all and cant fine any alternitives... iv heard of 203k loans or rehab loans but they are difficult to find andything on and most banks wont offer them. i dont want to miss this proprety or this amazing oppertunity for my family!!
0 votes Thank Flag Link Fri Apr 17, 2009
Hi Jessenia,

If the seller or bank (if it is already foreclosed) isn't going to obtain Title V, it would have to be a cash deal (usually investors) or possibly a rehab loan. I've worked with Cheryl Leblanc at Wells Fargo, & she was great with the rehab loan. Her number is 508-363-2205 or 508-498-7570, she can provide you with more information. If you aren't currently working with another agent & would like more assistance, please feel free to contact me at: 508-887-3291 or cjaillet@erakey.com

Christa Jaillet
ERA Key Realty Services
0 votes Thank Flag Link Fri Apr 17, 2009

If you can not find any bank to offer a loan for this situation (and given the current climate, that is not terribly surprising). Then there are several ways.
A) Negotiate for the seller to put the system in, and have the system paid for at closing. This is complicated, but can work for everyone, as it requires no cash out of pocket.
B) Buy the property with cash.
C) Escrow reasonable septic expenses to the banks satisfaction.

Those are the basics. Contact me directly if you'd like more information.
0 votes Thank Flag Link Fri Apr 17, 2009
Hello, Jessenia,

could you, please, tell a bit more about the situation?

Thank you. Bella
0 votes Thank Flag Link Fri Apr 17, 2009
I am assuming the seller has refused to make the repairs. Can you tell me a little more about the situation?
0 votes Thank Flag Link Fri Apr 17, 2009
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