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I would like to know if anyone here can answer this with some detail... Home we looked at is a short sale, going for 99K.. went to to see it and besides it being a mess with stuff that needs throwing out, the kitchen is only room that needs REAL repair...the listing says its got a self cleaning oven, yet there was no oven there at all....seems where the fridge stood the floor is all rotted out , kitchen just isnt functional at all....the listing states financing is conventional....So by seeing the kitchen, we realize now why FHA isnt available, they would never appraise it due to the kitchen....
The friend we have that works at the bank for mortg... approved us for a conventional loan too....After i told him about us seeing the house and the shape the kitchen is in, he said that conventional mortg. have their guidelines too when it comes to condition the home is in.... seeings the kitchen floor is rotted out and no stove or whatever else, that would all require repair before the loan could be given....
Is this true? ive been on google searching for this very question...FHA is clear on the guidelines of what house has to be like before they loan the money....
As a lot of homes out there today all seem to be in same boat, foreclosed, short sales, as is condtion, FHA probably wont finance them, and the homeowner or lender or REO will not do any repairs, so whats a person looking to buy, be able to do?? and if they are able to go conventional and put 5-10% down, does the house have to be in certain condition in order to get the conventional loan??? or was my friend, the broker, BSin me?
Its like you are stuck between rock and hard place....You are buying a home for 1st time, lots of REOs and short sales and foreclosures out there...some listings say ALL 3 financings avail. others just conventional, cause they know FHA would never approve the loan due to condition its in.....so if one goes conventional way, they have to repair the house before they can get a conventional mortg ?? nobody is going to repair those type homes and if FHA and convent. want the homes in certain condition, and nobody can or will fix them, then i guess they sit, or get bought up by investors with cash.
I also read about and have seen it listed on actual home listings, about 203K (FHA) and the 203K streamlined... I read all about them both today, if a house is AS IS and nobody will fix it, but you really like the house and price is great, but they dont have FHA financing, is it possible to go for that rehab loan and roll the home loan and repair loan into 1 mortg??
I asked the friend, broker about it, and he said if the listing of the home, says conventional financing, then they probably wont go for the rehab loan....
I said to him, what does the seller/lender of a short sale house, care if i can get an FHA rehab loan? that way FHA will give me a mortg cause they know the loan money is going towards repairing the home and bringing it back to being livable and up the value.....am i wrong about this??
So i guess bottom line is those 2 questions.... if you can only get a conventional mortg. does the house have to be in a certain condtion before bank loans you the money.....and so that means someone has to make repairs which nobody will.......
and since the house we like says financing is conventional, due to shape the kitchen is in and who knows what all else, but kitchen looks to be the biggest reason why no FHA, even though the seller/short sale lender says conven.mortg would we be able to get an FHA rehab loan so we can buy it and fix it up?? and does our realtor need to contact the seller/lender and ask them if we could do that??
dont know why that would be, they would still get their money of offer of house at closing, we shouldnt need their permission to get a rehab loan....my friend says we would, they may not want to deal with a rehab loan.. I said THEY wouldnt be involved in it...they get the house sold and we get fha financing and get it rehabbed
sorry sooo much and long, just trying to get some answers by neutral parties and real honest answers at that.....could be my friend just wants our business, who knows, best to get a few mortg comp. estimates right??
Listing agents usually specify cash or conventional loan if the house is in bad shape. A 203K rehab loan is added on to your home loan and rolled in to 1 loan at a higher interest rate (usually 1/2 - 3/4 percent higher). This rate is decided nationwide and not an option of your lender.
The agents don't usually mention 203K loans because they don't know much about them. Or because they take longer and are riskier. I had a client go that path with what she thought was a $10K issue to get an FHA loan and it ended up being a $20K issue due to issues found on inspection. She asked for a reduction, the bank denied it, and we cancelled the contract. But if they had found a cash or conventional loan offer, it might have gone through.
Pretty much all conventional lending standards require the home to be habitable / present no hardshios to occupants. A floor that is literally rotted away, especially in a kitchen that is missing appliances is going to be a red flag.
A 203k loan should be a good option in such a case. There is a bit more legwork to get estimates for repairs, the time to close thus needs to be extended.
There is not much additional risk. In truth the safeguards help to ensure that contractors are qualified and can do the work within the budget of the loan.
If you decide to go the the 203k route PLEASE get a mortgage broker who has experince with this product.
Thanks to you all for the replys...info helped.....Its a shame that 1st time buyers or 2nd time around buyers for that matter, hear there are so many homes out there , foreclosures, short sales, low prices cause owners just want to sell....then when you see the trend mls listing, its conventional or cash financing....That stops a lot of people from buying, they dont have the big downpayment, and or dont have the money to fix the repairs....so then the house sits cause nobody to buy it, unless you have cash or money to put down and fix it up......so many homes in this bracket and they just sit til they rot or an investor buys it up for a pittance......saw another house the other day, looked good too, but they want conv financing too...lot of these homes are being sold AS IS and seller is not repairing anything.....so if its that bad then forget about FHA, which is what a lot of people want for financing......can anyone tell me what are the basic requirements/conditions that a house has to be in or have in order for FHA appraisal to approve it ???
another twin i looked at was empty, old twin but clean and lots of character....upstairs walls had some paint peeling and a settlement crack in corner....it really was clean though...so because the paint is peeling off walls would that be an FHA non approval? seems the home is in original condition.. old original windows etc but all in decent condition....just not sure why they cant sell it in FHA financing
yes but thats the thing.. lender isnt going to do anything...so IF thats the only thing thats making this NOT be FHA, then whats a buyer to do?? not like I can put an offer in and then say ILL go in and scrape the peeled paint JUST so I can get FHA financing...cause it doesnt work that way...I could go around and do what needed to be done in order for FHA to approve it, then somebody else can step in and offer more.....see what im saying?? so like i said, IF thats the only thing thats causing it to be NOT fha, or there are some goofy minor things to be done, that somebody could do, but you cant do it til house is yours and you cant get the house cause its not FHA, so basically one is stuck between rock and hard place......
It's funny. in a bank-owned home, they will often fix minor repairs needed to get FHA financing. But the banks won'd do a thing for short sales. Odd
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