When out looking at homes, buyers can save themselves a lot of wasted time by paying attention to possible problems with the home before submitting an offer. Many first time home buyers in Colorado Springs are seeking bank owned properties but if the buyer is obtaining FHA or VA financing, FHA or VA guidelines may make it difficult to purchase a distressed property.
If a VA or FHA appraiser has concerns about a home, the buyer will not be able to move forward with financing unless the concerns of the FHA or VA appraiser are addressed. Some of the items listed below may be an issue with FHA or VA.
- Lead based paint – Peeling interior or exterior paint
- Exposed electrical wiring
- Safety Hazards – Unsafe structures such as decks, stairs, leaning fences, bad roof
- Broken windows
- Health Hazards – Mold in the bathroom
- Lack of carbon monoxide alarms within 15ft of all bedrooms (new law effective July 1, 2009)
- Non-permitted work done on the home
- Lack of smoke alarms
- Plumbing Leaks
- Foundational problems
Take a look around the house and if you see anything that may be a red flag for an appraiser, speak with your lender before submitting an offer on a property. Do not count on the bank to address issues that may arise preventing FHA or VA financing, many foreclosure properties are often sold as-is.
There are also guidelines for buyers who are borrowing money for their down payment through CHFA (Colorado Housing Finance Authority). For example, CHFA will not finance an income property or a property with two structures such as a house and a cottage.
Terms offered in the Pikes Peak MLS can also be a red flag for buyers when looking for properties. If the terms offered for a home in the MLS state: “Cash, Conventional” something may be wrong with the home preventing it from passing FHA or VA. On the other hand if you see: “Cash, Conventional, FHA, VA” the listing agent is stating the property should be acceptable for FHA or VA. Save yourself time and money by completing your own quick review of a home before submitting an offer to purchase it.