A few years ago when home prices went through the roof, so many people decided to refinance their mortgage home loans. With so much equity, they thought it was a good plan to take out money and remodel their homes?During that time, people were shelling out hundreds of thousands of dollars for these upgrades and additional changes. Nearly all of this required some kind of building permits but does not mean that the owners went and got them.
It seems to happen more often now that you are trying to buy a home. Sometimes you come across a home, in the Santa Maria real estate market that may be for sale. And there may be a new room added to the house that does not appear in the county records.A county says that it has two bedrooms but actually there are four in really, this is a good example.I had a transaction where the homeowner converted his single family home into a triplex, though it seems unreal it actually happened.These are some facts about getting finance while buying a home that does not have a legal permit.Even benig a conventional loand it will be difficult. If the only loan you can get it government loan or FHA, it would be better to look for a different house.
During the day of all the easy money, it is even possible that the current owner. Is not even aware of whether his home has an illegal addition or needs permits. That is how he bought the house.In order to get easy money the essential details were often ignored. At the time of renovation illegal addition may not have created a problem but it can now when you try to sell it.
Since there have been changes to the appraisal guidelines for rental properties that have come into effect since 2009. Appraisers usually don’t give livable square footage credit for work that was done without building permits. Without the extra square footage, the appraised value will be less than it would have been if the work were done legally.Basically no credit is given for the illegal addition. This does not imply that the bank will not grant a conventional loan. Just the value that you were expecting will not be there. Loan from government could be an issue as they dont acknowledge such cases.
Anticipating a high value loan amount may turn into disappintment, if your house appraisal is low. As a buyer you may not be able to purchase the home or get it refinanced.
Just to assume a situation, if you want to loan 70 percent of $200,00, i.e. $140,000. The new construction, which otherwise would have increased the property value, doesn’t count and appraisal value remains $150,000.As a consequence the loan may be cancelled.
As a buyer if the home does not appraise for the purchase amount. The seller has to reduce the sale price in this case. If the appraised value and the sale price do not match then the buyer will have to pay the difference from his own pocket; the bank will not even consider it as down payment.
The legalization can be done in a case of any work that has been done without a permit. This can be a pain, not to mention expensive. You will have to make sure that the code requirements meet. If a staircase is leading to a non permitted area it must be 36 inches wide. Replacing an entire staircase involves spending a lot of money. Walls might have to be opened to inspect the plumbing and the electrical. If these areas do not meet specified requirements they will have to be brought up to the mark. Addition or removal of windows might happen. To have the inspection passed and get the appraisal value up, all corretions will have to be made. You will have to find out the code requirements in your area and its worth to you. To legalize a house.
Certain neighborhoods in every city have more homes with illegal additions than other neighborhoods. The Santa Maria homes for sale are no exception to this.