You’ve been pre-qualified for a 3.5% down-payment, FHA home loan, to buy the house of your dreams in Arizona. You and your Realtor have searched for months and finally narrowed it down to one home. It’s a short-sale located in beautiful Phoenix, AZ. This is the ideal location; not too far from your office, great schools for the kids, plus terrific dining and night-life for you and your wife.
Your Realtor is very sharp and has well over twelve years of experience selling high-end homes in Arizona. You make it through the inspection period with no items needing repair. Your Realtor gives your lender the go ahead to order the appraisal. The FHA appraiser returns the completed appraisal with a value equal to the sales price. You’re feeling terrific because you’ve just locked in an incredibly low interest rate of 4.875%, which is fixed for 30 years, on an FHA home loan.
Everything seems to be moving along smoothly, until you get a call from your Loan Officer. She sounds concerned and you immediately begin to panic. She tells you that the lender has turned down your loan because the house has a shared well for water, which is connected to more than four homes. You don’t understand why your loan was declined? Your Realtor doesn’t understand either; he has sold many homes in this area without a problem, which were also financed.
The reason some lenders cannot finance a home with a shared well connected to more than 4 homes, is that it doesn’t fall within the standard FHA loan guidelines. Prior to 2007, many of the homes in Arizona were financed with conventional financing. Therefore, very few Realtors and Loan Officers ever experienced a problem with this specific circumstance. Self-admitted, many industry professionals need to educate and enhance their knowledge of FHA guidelines. It is possible for this home to be financed under FHA guidelines; however, it will require some additional documentation, more work from everyone involved, and maybe even a few sleepless nights. Hopefully, you are working with educated professionals that will be able to alleviate many of those restless nights and extra stress!
This was an actual scenario we experienced with one of our referrals. Luckily, we were able to fund this client’s loan after he received a loan denial from another lender. Although in order for this loan to work, there are a few specific requirements that need to be met. Please contact David to find out exactly what is required.Questions? Contact David Krushinsky Today!