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Can escrow be asked for after closing to repair an item to the home?

by Nils.alan.hansen327 from La Crosse, Wisconsin. Jan 26th 2017 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

More info needed.. but in general, yes and no.. if the property deficiency was notated on the appraisal, then that repair must be maid prior to closing.. and an appraisal re-inspection is required to verify the deficiency has been corrected.. If you originally applied for a 203K or a HomeStyle renovation loan, then that loan will allow for repairs after close.. the repair funds are held held back and paid out upon verification of completion.. but this is a completely different loan product.. Additionally, there are lenders who will do small hold backs, typically up to $3000 or so.. but the majority of lenders will not do hold backs.. I'm a preferred Lender with Arizona and California being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Jan 26th 2017
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,446 contributions

Not really sure where you are going on this question. Some items must be repaired prior to closing. Some items may potentially be allowed to have an escrow amount withheld from the seller to ensure something is fixed after closing. But this stuff is all dealt with up front, and prior to closing, while the repair is potentially done after closing. Lenders don't like escrows for repairs, and generally only allow things that absolutely can not be done prior to closing. As I am in MN, and you in WI, an great example would be that you can not put in a new septic system in WI in January because of the frozen ground, so a lender would allow an escrow for the septic system to be installed in the spring. For loans in WI, MN, or SD, visit me at www.WI-MortgageBroker.com

Jan 26th 2017
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I have a FHA loan and they flagged the painting on the outside in the appraisal. The underwriter told me that I was going to have to escrow the money; however, when I went to closing nothing was in the closing disclosure or In The closing documents. Now there telling me that I need to place money into escrow for the

Jan 26th 2017
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Repairs. Is this something the lender can do after closing has already happened?

Jan 26th 2017
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

Ok.. Just to clarify, even though you went to "Closing" it does not mean that the file has actually closed.. You may have signed the final closing documents, but more than likely the lender is holding back the funding and recordation until you establish an escrow for the painting repairs.. It sounds like your lender did a poor job of communicating this to you.. For repair escrows, you will need to contact a licensed painting contractor, get a bid, and submit that to the lender.. Additionally, you need to fund an escrow account for 150% of the bid amount.. Example: contractors bid is $1000, you need $1500 in an escrow account. The funds that go into the escrow account must be verified just like your down payment was verified.. It can be a gift, but the same rules apply as if you received a gift for the down payment.. Once the painting is done, then your contractor submits an invoice for final payment.. any overage remaining in the account will be refunded back to you.. it's also possible that the lender will require an appraisal re-inspection, which will be an added cost to you.. I'm a preferred Lender with Arizona and California being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Jan 26th 2017
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Bill Quigley (www.AmeriFirst.com)
#21 ranked lender in Wisconsin - 3 contributions

We will allow escrow holdbacks on a case by case basis if work can be completed within 30 days of closing. You will need a detailed bid from licensed contractor showing labor and material costs; we will hold back 1.5 times that amount in escrow until work is completed. Repairs will be inspected and then invoice submitted; any excess funds remaining will be returned to seller. If repairs too extensive for escrow holdback or if work cannot be completed within 30 days of closing, buyer can obtain an FHA 203k or HomeStyle Purchase/Renovation loan and purchase property and do repairs after closing. I am licensed in Wisconsin and Illinois. Bill Quigley NMLS 288189, Branch Manager, AmeriFirst Home Mortgage NMLS 110139. 608-831-4663 www.Amerifirst.com/bill-quigley.

Jan 27th 2017
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