We’ve recently run into a series of people purchasing homes in NC with Underground Oil Tanks. If you are applying for a USDA Home Loan (or any other Government Mortgage Program, frankly) this can be a problem. The USDA Home Loan Environmental Requirements also include specific limitations for buying a home in a floodplain.
The USDA Home Loan Handbook has this to say about Environment Requirements and Petroleum Tanks:
The Agency must consider the management of hazardous substances, including hazardous wastes and petroleum products, from two perspectives: liability under hazardous substance and hazardous waste laws, and the economic risks posed by the presence of hazardous substances.
Then… it get’s really technical when it comes to figuring out what to DO about the underground Oil Tank:
- USDA Home Loan Underwriters will require a complete environmental assessment.
- Meaning, it’s not enough for the Oil Tank to be removed – the USDA Home Loan Environmental Requirements say that we must have soil tests (which can be pretty expensive) showing that there’s been no contamination or LEAKS.
Here’s our take on it. Think twice before you buy a house with an underground tank. If it’s a known issue – and the appraiser notes it on the appraisal, then the SECOND problem is knowing if it ever leaked. The soil survey’s etc., involved can be a NIGHTMARE!
Additionally, the USDA Home Loan Environmental Requirements state that a home can not be located in a floodplain, unless the house is:
- In a town that has an approved Flood Plain Management Plan, AND
- The home is located on land that is in accordance with the Flood Plain Management Plan, AND
- We must submit an impact and feasibility plan to USDA with the Appraisal, AND
- The First Floor elevation must be above the 100 year flood zone elevation, AND
- Flood Insurance must be included in the loan payments.
USDA Home Loans are only made to Owner Occupants, in qualifying areas. Geographic Footprint: USDA Home Loan underwriters must insure that the house you are buying is in one of the “geographically qualifying areas in North Carolina which is designated as Rural for USDA Loans.” (This will be changing later – maybe by Oct 1, 2014) You might be surprised at what they consider rural!
Many “typical” subdivisions outside of cities like Charlotte, Raleigh and Greensboro qualify. In fact, every county in NC has at least some part of it that qualifies for the program (Durham County is probably the toughest area to find a home).
In North Carolina, the USDA Home Loan Environmental Requirements can be tricky. Don’t hesitate to call us if you have any questions! Steve and Eleanor Thorne, NC Mortgage Experts 919 649 5058.
If you have questions about qualifying for one of the no money down home loan programs let us help you get pre-qualified! It only takes a few minutes! We love helping folks buy their dream home!