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Purchase Contract for Heat?

I am purchasing a home from a friend "as is". The house currently does not have heat. The bank said they will not loan unless there is heat installed. The owner and I have agreed that 160k is the highest I'm willing to go for the house, and my loan officer agrees that this is the best for my income. Currently the owner is unsure of how much his house is truly worth, but he cannot accurately judge the true value until after heat is installed. He does not want to be stuck with a 15k upgrade if the house ends up only appraising for less than he is willing to sell for. I do not want to be punished financially for backing out of the deal if the house appraises for less either. Obviously he needs to install heat to sell to anyone, but this has made me rather anxious about the "what ifs" for when the appraisal comes through. The loan officer has said that 150k is his guess but will not know until after the official appraisal is over post-heat-installation. Any tips? by nicholaskeeling516 from , California. Oct 8th 2020 Reply

Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 2,336 contributions

The best advise I can give you is to slow down. You are buying a home AS-IS. You know the furnace is shot. What else is wrong. You will want to have a professional home inspector inspect the home before you commit to buying it. You need to know everything that is wrong. You can't protect yourself unless you know what you are getting into. This will be the best $300-$500 you will spend. There are loan programs that can included repair items such as a new roof, new furnace, or Air Conditioner as a part of the loan. If your loan officer has not suggested one of these, then he/she is not the person you want to deal with. Search for a well-seasoned Mortgage Veteran. The lower their NMLS number, the longer they have been in the business. I would recommend that the agreement to purchase includes the seller paying for the initial appraisal, with you agreeing to reimburse him/her at the closing. This way if the property does not appraise, or if the serious repairs that MUST be dealt with as a condition of the loan, you are only on the hook for the appraisal if the deal goes through. ~ Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Licensed in Arizona, California, Georgia, Oregon, and Washington. Need help in other states? We've got you covered. NEXA Mortgage is licensed in 46 states ~ 480-889-9000.

Oct 8th 2020
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