By Amanda from Boston, Massachusetts
Dear Kate, We have been looking for a nice vacation home in New Hampshire. After a lot of searching we found a house that would be perfect for us: four bedrooms, two baths in an established mountain community with a mix of week-enders and full time residents.
The house needs some work, but really any house we bought we would plan to renovate. We do the work ourselves and enjoy it.
The systems in this chalet are good- sound roof, sound structure, the septic system okay. It may need replacing in a few years. The house needs a face lift inside and a new kitchen. The price is very reasonable for this area too.
We thought we found the dream place and put in an offer very close to the asking price. And we put down $25,000, to finance $185,000. The offer was contingent on the mortgage approval.
The bank appraised the house for less than what we agreed to pay. They felt the septic system would need to be replaced.
But if we use it only on week-ends it will hold up indefinitely. Now we are in a quandary. We feel strongly that the bank appraiser called this one wrong.
Maybe opportunity is knocking. So try to see this as a good opportunity. You may come through this with better terms.
Due to the current foreclosure crisis, bank policies regarding appraisals have become stricter. The septic is probably adequate for a vacation home. But the bank anticipates the septic becoming their problem if you went into foreclosure and they were forced to resell the property. This is probably the attitude you are feeling behind the bank's decision. So, it all comes down to the golden rule of mortgage lending, he who has the gold makes the rules.
Appraisals are only the result of one person's opinion on a given day. Yes, the bank lends a lot of credence to appraisals but in reality, they are just an opinion. So you may be able to work around this roadblock.
Best wishes and good luck,
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