ArcaMax

Reader Question: I sold my home, and after seven years, my previous home is now for sale (bank-owned). I have viewed the house, and it requires minor cosmetic repairs. If I were to repurchase the home and go to a bank with the deed, what questions should I expect from the bank regarding refinancing? I am retired and would be using a portion of my retirement for this venture. I desire to invest and put the money back into my retirement. I do not want to live in this house (it would be like going back in time), and I do not want to rent or deal with tenants. I would hope to resell the home. Where can I go to receive questions I need to ask myself and answers to my questions?

Monty's Answer: Buying back a familiar property can be both emotionally tempting and financially rewarding, but lenders will see the deal strictly as a short?term investment. The loan officer will probe six specific aspects.

No. 1: Capacity -- Proof of income matters even in retirement. Bring Social Security award letters, pension statements, annuity distributions, and any portfolio withdrawal schedule.

No. 2: Capital -- The lender will verify that you have seasoned funds for the down payment, closing costs, repairs and six to twelve months of taxes, insurance and mortgage payments in reserve.

No. 3: Credit -- A score above 740 earns better pricing; below 680, and you may face points, a higher rate or a larger equity requirement.

No. 4: Collateral -- An appraisal must support both the as?is value and the after?repair value. Visible defects (peeling paint, missing fixtures, broken windows) can trigger escrow hold?backs or demand repairs before closing.

No. 5: Character -- Your track record selling or rehabbing homes influences underwriting flexibility. A first?time flipper usually receives stricter scrutiny than a seasoned investor.

No. 6: Exit: Because you will neither occupy nor rent, underwriters demand a clear resale timeline. Many programs prohibit resale within 90 days and require a cash-out refinance after six months of title ownership. The market is turning away from sellers in many markets.?

Questions to Ask Yourself Before Bidding. What realistic resale price do three nearby renovated sales support? Could a 5% market dip, or an unexpected major repair, erase my profit? After commissions, transfer tax, holding costs and capital?gains tax, will my net return beat what my retirement portfolio might earn passively? Am I driven by logic or nostalgia?

Building a Lender?Ready File

-- Inspection First: Hire a qualified inspector before you sign. Price every deficiency so your cost estimate is bulletproof.

-- Two Written Contractor Bids: Lenders prefer verifiable numbers over guesswork.

-- Comparable Market Analysis: Ask a trusted real?estate agent or appraiser to write a brief comparing at least three renovated sales, three actives, and three expired listings.

-- Term Sheets from Two Community Lenders: Local banks, mortgage brokers, and credit unions often offer investor programs with lower fees than national outfits. Collect lender requirements in writing.

-- Tax Review: Even though you plan a quick resale, speak with your CPA about short?term capital gains.

In Summary: Bricks can build wealth, but they are illiquid and unforgiving. Put every number on paper, then run a worst?case scenario that assumes a one?year hold and a price reduction. If the deal still appears healthy, proceed with confidence. If not, enjoy the memories and leave the risk to a younger buyer.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @montgomRM or DearMonty.com.

----

Copyright 2025 Creators Syndicate, Inc.