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Hi there - we are considering buying a property that needs major work. It is practically down to the studs work. We estimate it will cost around $100k to do it properly.
The total cost of house +$100k would still be far less than we are approved for with our mortgage.
I know that we can buy the house and then pay cash for the upgrades and then refinance once they are completed. However, with interest rates as good as they are, I would rather not have to do that 6 months down the road. I would also rather not have to pay cash for the repairs.
I understand that construction loans are a real PITA with everything needing approval every step of the way, expensive, etc.
Are there other ways we can get a mortgage from the start that will allow us to complete the remodel without depleting a big chunk of my cash reserves?
We were wondering if we could ask for cash back from the seller or something like that.
I would never buy a home that will need 100k in work....unless you're getting a reallly good deal. Like equity would be 100k after everything is said/done
Can I tweak the question a little?
I'm looking at a home for $250,000 on a street of mostly $500,000 homes. It's got a nice lot and is a decent size but has had the same owner for over 20 years and every room is outdated and, frankly, VERY UGLY.
Can I get a "subject to improvements" appraisal to let me know what it would be worth after I renovate? ANd also, how do you recommend financing improvements? I'll only be putting about 5% down.
Location: central, between Pepe's Tacos and Roberto's
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Although I'm not very familiar with it, I believe Countrywide has a loan product specifically for the purchase and rehab of "fixer-upper" properties. I can't recall what it is called, but it is structured similar to a one time close construction loan, with estimated future value being used to determine loan to values. Again, I'm not especially familiar with it or if they even still have it, but it they do it may be an option.
The mention above for the 203K loan is your answer. I dont know what that poster put 35K next to it though.
Yes this a FHA rehab loan and it works in 3-4 draws. They will apraise your home based on its completed value. Your labor is not payable. In other words you can not claim to be a carpenter and do the framing and be paid for it. What you can do is buy extra materials on that same money you save by not paying some one to do it. The HUD inspector will have a list of his approved contractors and if you use them he gets very easy. I did not and was just fine.
You will be subject to local zoning inspections AND HUD inspectors. They expect top notch work. The junky inadequate excuse for quality you see on shows like Property Ladder or Flip This House will not do. These amature flippers are even dummer then the show comentator who says how nice the work is.
Few give this loan anymore but Country wide still does. If you are not a seasoned construction professional my advice is to stay away. If you say you are a handyman, I still say stay away. The paperwork and red tape is endless. The meetings with the HUD people are endless. But in the end if it works you do have a decent loan. Just one loan.
Hi there - we are considering buying a property that needs major work. It is practically down to the studs work. We estimate it will cost around $100k to do it properly.
The total cost of house +$100k would still be far less than we are approved for with our mortgage.
I know that we can buy the house and then pay cash for the upgrades and then refinance once they are completed. However, with interest rates as good as they are, I would rather not have to do that 6 months down the road. I would also rather not have to pay cash for the repairs.
I understand that construction loans are a real PITA with everything needing approval every step of the way, expensive, etc.
Are there other ways we can get a mortgage from the start that will allow us to complete the remodel without depleting a big chunk of my cash reserves?
We were wondering if we could ask for cash back from the seller or something like that.
Thanks!
YOu can get credit for repairs to do to the home, which will be held in escrow acct.
you also can get a loan to fix the house .
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