You've been pre-qualified for a 3.5% down-payment, FHA home loan, to buy your dream home in Rio Verde, Arizona. You and your Realtor have searched for months and finally narrowed it down to one home. It's a bank owned home located in Rio Verde, AZ. This is the ideal location; horse privileges, no traffic, close to terrific dining, and the perfect location to raise your kids.
Your Realtor is very sharp and has many years of experience selling homes in Rio Verde, AZ. 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. He sounds concerned and you immediately begin to panic. The lender has declined 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 Rio Verde, AZ 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 and probably 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. If you're currently considering purchasing a home with a shared well connection to more than 4 homes and need some assistance, please contact The Krushinsky Team.
About the Author
My name is David Krushinsky and I am a Phoenix mortgage specialist that is truly passionate about my profession and the result is that nearly 100% of my business is by referral from satisfied clients, trusted financial advisors and the most experienced REALTOR®'s in the Phoenix area.
Questions? Call 480.339.1576 or Visit My Website
Great job on funding! Would be great to keep in touch with these buyers over the years to help fund the next purchaser's when the current buyers decide to sell