After going through the experience of buying my first home in a rural area where about 85% of the homes are outside the city limits and about 50% have holding tanks, I decided that it might be a good idea to share my experience on the process.
Let me start by saying when we first went to the bank to get a loan approval we were told we were approved for an FHA loan and could buy a house in city only. Our original loan officer and our new loan officer both told us you can’t get a house outside the city limits for water and sewer because Ketchikan was not exempt from the general Alaska waiver that most other areas in Alaska had through FHA.
Once we started looking for a house in the city (which we were approved for 250k) we started to realize that even with our budget most the houses were either a lot higher than 250k or even if we get in at 250k the houses were not that great of shape or it was more than we wanted to pay each month. Now keep in mind we live on an island where everything is more expensive. With that knowledge we started doing research as to why no one was getting FHA loans in Ketchikan, what we found out in the old handbook was that most of Alaska was exempt but no one in Ketchikan really knows whats what with this area. We talked to multiple people and everyone kept saying no one was getting “waivers” in Ketchikan, so we started calling people affiliated with HUD/FHA we called Santa Anna originally and eventually worked our way up to the guy who wrote the FHA policies and what we found out was surprising, no one seemed to know what was what even the guy who wrote the policy tried to make it easier.
Let me apologize for getting ahead of myself, I will try and break this down in Sept 2015 the FHA put out a new handbook, so things had changed from the past and in that handbook people said you needed a waiver, in the new handbook it only needs to be noted by an appraiser that the water does not meet guidelines of having city water. The grey area here is that most tanks in Alaska catch water and most FHA and Lenders do not like this, so this is what we had to do to get approved. We pressured the lender for one telling them what we knew and who to contact, we got them to get the underwriter to say they were ok with the fact it was a “water tank” we also disconnected any water catchment system to make it a holding tank and worked with someone to haul water to the property. Another thing working in our favor was the water tank was in an inclosed area.
With all this being said I’m surprised we closed in 60 days and also that we were one of the first people to get this loan done in this fashion. I think this brings into question no matter where you are is how much do you love the house, is it worth all the headaches, are you willing to do the footwork and research? Are you willing to do the things that the Lender wants to get into this house?
Just like any other loan or situation with like a foreclosure loan or anything else it will have challenges and the question is do you want to do what it takes to make the loan happen? For us we just wouldn’t take no for an answer. I know things had their bumps but we knew the house we wanted, we saw the potential so we pushed.
Here for example most water tanks don’t have a roof, you must ask yourself are you willing to work with the seller to get something covering the tank, are you willing to unhook stuff make sure the proper equipment is in the house to pass what FHA and your lender wants? If so then there is ways to make the loan happen we are proof, and if you have any questions please feel free to ask me. Their are people who are willing to work with you we talked to a lot of people and we did a lot of research if one lender won’t that doesn’t mean another will not. You can do your part to find out all the information you can the challenges you have is Lenders have their own guidelines over the government FHA portion, but what we realized is determination and arming yourself with research will help you in the long run.