Profile picture for sdfricke

Loan declined because bedrooms in basement

Hello, I recently had a loan declined because the home was unusual in the fact that both of the bedrooms were in a daylight basement.  Both bedrooms have egress windows and are up to code, but there were no comparable houses that sold in the past year with this sort of set up.  The house is really nice compared to the other houses in the price range, but this silly regulation caused my loan to get denied.  My broker talked with a few other lenders who also said the same thing.  There is one bank who said they can probably make it work, but I am wondering if this would be a very unwise idea to buy the house if this bank is willing to finance it?  I assume this will be an issue when I try to sell the home later on down the line.  I like this home much more than anything else on the market, and I have already put in about a grand with the inspection and appraisal, so part of me wants to go through with the deal if I can, but my brain is telling me that it would not be a smart decision.  Any thoughts would be greatly appreciated.  Thanks!
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 26 - Moscow
We think we've answered this question for you!
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
 
 

Answers (6)

You will be hard pressed to find a conventional lender that will approve a loan on this property. There is no way for an appraiser and lender to accurately determine value on the collateral. That is making the assumption that there are no homes with zero above grade bedrooms sold recently in your area. If you have a good down payment 20% or so there should be finance options available to you in your area. But the issue is, as stated by others, what happens when you want to sell or need to sell? You will have a very small pool of buyers to pull from and that will impact your marketing time and definitely sales price. Good Luck!
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 27
Duplicate post by mistake
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 27
Profile picture for zuser20140120081814583
Please consider the length of time that you intend to stay in this house.  If you're only going to be her a short time, the risk of having a hard time selling it because potential buyers can't get financing might out weigh the benefits of having this nice house.  If you spend the rest of your life in it, the only impact will be on the amount that your heirs get.

Be careful of people who are new to Zillow & blatantly violate the rules.

Brad
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 27
I've done homes like this in the past and have never had an issue.

 My name is Ryan Wohlert and I'm the Branch Manager of Meridian Mortgage Solutions. I'm a local Indy lender who can answer all of your questions and help you with your financing needs. Please feel free to contact me at [Removed by Zillow Moderator. Please see our Good Neighbor Policy.]
Also check us out on Angie's List as we're an A graded lender.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 27
I am surprised to read this because in my 20+ years, I have never run into this scenario. I do know of some loans that have been turned down because the home wasn't built with "traditional" materials and those buyers just went to a different lender that was comfortable with it.

Lenders are still nervous and the big box lenders still don't think outside the box.  There are probably several factors that played a part in the denial and they just used that one as the "reason".  They are extremely nervous about the potential of buying the loan back if they can't resell it or insure it.

You can't "force" a lender to lend you money if they aren't comfortable with the collateral / risk.

You might find out who the current lender is for the seller and approach them.  As long as you have a lender that will help you buy it, they will hopefully still be there to help the next buyer when it is time for you to sell it down the road as well.

Please take the time to update this post when you resolve the situation as I am interested in the outcome.  Best of luck!
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 27
This is going to sound simplistic, but make a list of pros and cons to help make your decision. It sounds as though you need to weigh the benefits of right now with the challenges of the future and only you can make the decision of where you choose to compromise: be out the $1000 now or face challenges selling in 5-10 years. You also may want to talk to your lender about a different loan product to see if it would be a better fit with this home.

Good luck!
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 27
 
Related Questions
Loan declined because bedrooms in basement
Profile picture for Mark Miron
Latest answer by Mark Miron
March 27 | 6 answers
how do i post a home without having to pay a fee?
Profile picture for Debbie Spurgeon
Latest answer by Debbie Spurgeon
March 15 2012 | 2 answers
  • Asked by Debbie Spurgeon
  • In Home Buying
  • February 20 2012
Mortgage Rates
 
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 1147 Tiempo Dr, Moscow, ID Home For Sale
    1147 Tiempo Dr, Moscow, ID 83843

     For Sale: $162,500

    • Beds: 2
    • Sqft: 1018
    • Baths: 1.5
    • Lot: 3266
  2. 1529 N Polk Ext APT 1, Moscow, ID Home For Sale
    1529 N Polk Ext APT 1, Moscow, ID 83843

     For Sale: $74,900

    • Beds: 2
    • Sqft: 868
    • Baths: 2.0
    • Lot: --
  3. 1310 W A St APT 101, Moscow, ID Home For Sale
    1310 W A St APT 101, Moscow, ID 83843

     For Sale: $99,500

    • Beds: 3
    • Sqft: 1050
    • Baths: 2.0
    • Lot: --