The Semi-Known-About Landmine

This is something I’ve been avoiding discussing, but today I figured it would be better to find out sooner than later (especially after a $450 mortgage application fee).  The house I’m planning to buy is gutted.  It doesn’t have anything in it.  No appliances, no counters, and no hot water tank.

Whenever I would talk to realtors, they would bring these things up using terms like “habitability”.  They said if there wasn’t at least a stove, no lender would approve a loan, so essentially you’d have to pay cash.  Today, I did a lot of research into this “habitability” thing and what I read seemed to imply that it was a requirement for FHA loans.  I didn’t think I was getting an FHA loan, just a conventional mortgage.

To be sure, I emailed my mortgage agent and asked the question.  He reply was that yes, it is a problem.  The house must be livable and receive a certificate of occupancy.  I will call him later today and see what options are available to me.

One thing I have been reading – in the near-constant absorption of knowledge about housing – is a mortgage type called 203(k).  This is a construction loan intended for such situations.  The situation being, you can’t get a loan on the house because it needs work, but you can’t work on the house until you own it.  Sounds like I’ve said this before.  Oh, yeah.  I did.  I have also read a lot that these loan types are a serious pain in the ass and most people regret doing them.

However, we’re not talking about a $20k advance like most people are.  A new water heater is $1000, and if a new stove is required, maybe $500?  I don’t understand the stove thing.  I would think a decent mix of homes are sold without appliances, and the new owners just buy new ones.  I’ll spend some time and maybe make some calls asking about certificate of occupancy just to see what the minimum standards are.

Here’s the important thing.  It doesn’t even bother me.  Whenever I was getting into a stressful situation, whether it was a job interview or a first date, I would always tell myself, “Don’t worry about it, just do it.”  And I always made it work.