Michigan Real Estate Purchase: The Deadly Repair Escrow

Bum Bum Buummm. Enter scary music and cold sweats, you just fell in love with a home that has a broken furnace and a big orange stain where a bathtub used to be. Chances are your financing is going to resemble that orange gunk on the tile right?

There are options. With conventional financing, yes you will be sunk. The bank will only want a safe asset to secure. There are some programs that allow flexibility here like HomePossible, but it is very impractical.

The good news is, that with the foreclosure boom, came the need to repair existing homes as production of new homes slowed to a crawl. Government financing fills the void of sensible repair financing. Actually it filled a long time ago before the housing boom started and home construction grew out of control.

With FHA there is a possibility for a repair escrow; however the repairs must be minimal. The better option is the 203k loan that will allow a closing to take place like normal but provide you with money for all sorts of repairs including essential appliances.

If you are lucky enough to find a good loan officer that knows how to work the USDA repair options, they are far superior. You will need to find a property in an eligible area, but it is a very easy process on the borrower.

No matter what, be prepared for a little extra time and effort by both you and your purchase team. Always shop around for your repair quotes and check the reputation of any contractors with resources like the Better Business Bureau before making any decision.


For more in-depth answers or help go to our website:
www.iconmortgagelending.com
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