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FHA Loans and FHA Loan Requirements have returned as the topic of the day for first-time home buyers.  HUD/FHA is the onemain loan source for these buyers.  Underground Heating Oil Storage Tanks have also become more of a topic of discussion.  The HUD loan products may also be the one main financing source for repeat buyers and homeowners with FHA Mortgages who want to refinance using the FHA Streamline mortgage loan program.  Although the FHA Loan may offer the best loan terms, the Home you buy must also qualify based on the HUD guidelines.  FHA does offer the FHA 203k loan that can be helpful when buying a home if you need, or, plan to do upgrades to the home. VA - MD - DC, FHA.

There are many items on the list of concerns when buying a property. One of these items that is becoming a greater concern is the Underground Petroleum Storage Tank, or UST.  The Underground Storage Tank has been used for many years to store primarily Heating Oil, Waste Oil and Gasoline.  Many homes and buildings use Heating Oil and have Underground or Aboveground Tanks to store the product. Some farm properties may also have gasoline storage tanks that also need testing or removal.


 
FHA Loans - FHA Money
 
Recently several issues surrounding these USTs & ASTs have increased the concerns of Lenders who finance properties that have these tanks.  Also, because of Environmental, Legal and Safety factors, more Buyers, Real Estate Agents and Insurance Companies are taking a closer look at these properties including HUD/FHA.  FHA requires that the Appraiser make note of any visible signs of a leaking UST, however, since the tank and oil lines are out of sight, most leaks will also be out of sight. Contact a Home Inspector - jenright@anatomyhome.com.


The primary reasons for the leaking tank alert is the possibility of Groundwater Contamination, which can effect Drinking Water, Contaminate Soil and become an Environmental Hazard.  A leaking UST can also be a financial burden by wasting the property owner's money with oil leaking into the ground.  Clean-up/Remediation of oil contamination can be an expensive undertaking and may include third party damages if the contamination migrates onto adjoining property owners.

If a leak concern is reported to the Lenders Underwriter the Underwriter will order a test of the tank.  If the Appraisal does not have a report of a recognized environmental concern, the tank will not be tested.  There are no other requirements or provisions for tank testing unless requested by the BUYER of the property. So, "Mr. & Ms. Home Buyer" it is on you to do your due diligence, therefore, require that any and all tanks on the property be tested. 

*  Chain of Custody *

 Remove and Dispose of Contaminated Soil using "Chain-of-Custody" Documentation.

*


And yes, while Mortgage Rates are low, we should be buying property or re-financing our real estate loans to lower our monthly payments and get these great rates, however, if we are buying a property that heats with heating oil, which, by-the-way, is great heat in the winter-time, we need to understand what we are doing. Seek information on Heating Oil Tanks & Tank Soil Test. 

Do not let a heating oil tank stop you from buying your perfect home.  Find out more about the FHA 203k loan which is perfect for buying a home when you want to replace or repair the heating system, or make other upgrades and avoid a personal loan.

So now, before purchasing a property, we should have all underground & aboveground oil tanks tested. The responsibility and "liability" of a leaking tank will belong to the "New" Owner if the property is purchased.  The low interest rate and low monthly payment will become very expensive and the property could become worthless if it is contaminated.


Leaking Underground Tank
Leak in Oil Tank

If you are purchasing through a Realtor or if you are buying For-Sale-By-Owner, be sure to include in your Real Estate Purchase Agreement an Underground-Storage-Tank-Test.  These test are very inexpensive for the result they bring.  The cost of a tank test by a Certified Test Method will depend on the location and depth of the underground tank.  If you are financing with a HUD/FHA Loan, be sure and hire an "Independent 3rd Party Tester" that is using "Certified Test Method".  Also, If you are financing with a HUD/FHA Loan, be sure that your Lender approves the Test Method.

Some properties have been found to have more than one tank, therefore, a property inspection should also include a search for additional underground tanks.  If the property is on "Well-Water" you may also want a "Water-Sample-Test of the drinking water.

Most of the leaking tanks have been found in older homes, however some tanks have leaked as early as 10 to 15 years. Oil tank leaks are usually the results of corrosive soil, however, some are from improper installation or tank and piping defects.


Most underground oil tanks are steel, this steel can rust over time allowing the oil or gas to leak into the ground.  Although it is hard to pinpoint exactly at what age this may occur, any tank at any age should be tested when you plan to purchase a property.  Homeowners who use Oil for heat should have their Oil Tanks Tested at least once every three years.

Also homeowners who upgrade their Oil Heat Systems, or, test or replace their systems, should be sure to keep the records and reports from the companies that do the work.

- EPA Regulations -
Most states do not regulate Underground Storage Tanks that are less than 1,100 gallons.  Most residential fuel tanks hold between 250 and 750 gallons and some are 1,000 gallons. These tanks are not subject to EPA Regulation, Remember, as you now know, that if the tank leaks the owner is responsible for the contamination.


This Means Contaminated Soil Removal
Pointing to tank leak

Therefore, to take the easy way out and NOT be responsible for thousands of dollars worth of contaminated soil removal from a leaking tank, have an inspection of the tank and associated piping.

Real Estate Prices keep falling in many areas of the country.  To Buy or Not to Buy, that is question on many peoples minds.  No one has the real answer.  Banks are still slow to lend and more foreclosures are in the pipeline.  So you can choose for yourself what you think is right for you.  Remember, an FHA 203(k) Loan works well to resolve all of those Fix-Up and Fixer-Upper situations.

If you are looking for a safe mortgage it will be a 30-year Fixed Rate or a 15-year Fixed rate "Fully Amortized" Mortgage.  Stay away from the Adjustable Rate Mortgages.  They will go up as the rates start to rise, and they come down slower than they go up.


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