~ written by Rylan Stewart of Central Coast Lending, with contribution from Monica A. Chudgar of Patterson Realty.

After the real estate bubble popped and the economy fell into recession, many homeowners decided against leaving their homes and “trading up” or investing in new property, and instead focused on improving what they already had.

As new home construction has declined over the past 5 to 7 years,residential additions and alterations have increased – and some of the work done hasn’t been permitted. What does this mean for current buyers and sellers? Will lenders accept non-permitted additions and alterations?

The broad answer is “yes”: lenders will accept properties with non-permitted additions and alterations, but there isn’t a single set of rules to follow for obtaining financing for such properties. What works for one loan, might not work for another.

Monica Chudgar, an appraiser and realtor, gives an example. “I appraised a home that converted the garage to a second unit with a full bathroom and kitchen. The lender didn’t want the stove in there, so the owners removed the stove and took a picture. After that, the loan went through fine.”

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