Secondary Market Financing and Septic Tanks/Systems?

[Daniel Dietz]

Hello,

I am usually on here talking about investing in rentals, but this time have a totally different questions about 'secondary market' or traditional long term loans. 

My daughter had made and offer and had it accepted on what will hopefully become her first home.... it is a short sale, and the offer was accepted... all good so far.

This property, as many rural propitiates on the lakes in our area, has a 'holding tank only' system - meaning there is NO 'drain field' attached to it so it needs to be pumped each time it fills up... about once per month for most people. The property DID have a perk test which ALLOWS (but not requires) a 'mound drain field' if desired. The reason many properties dont do this is that the mound adds about $10,000 to the price and it is primarily a 'weekender' lake where they only need a pumping once a year... so they skip the 10K expense.

Now on to the financing part.... so two local banks have said that their underwriters say that 'the system must be up to code' to get secondary market financing'. I think they are not understanding that the system IS up to code... the mound field is an OPTION that could be added IF the homeowner wants to. How do we get the bank to understand this? 

She DOES want to add the mound field, and the bank will do a 3/1 ARM for her to buy, fix, and then refinance down the road. She would like to aviod the $1500 closing cost on the refinance AND lock in the long term rate if possible.

Any thoughts? Thanks, Dan Dietz