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I know this question has been asked, but here goes...Considering putting an offer on a home that needs considerable work (at least 200k). House is priced at 500k. If the house was in good shape would sell for 700k (wouldnt be much profit, but this is a home we want to live in for the long haul). I have been approved for a conventional loan, but dont have the cash to spend on extensive repairs (windows, plumbing, electrical, floors, new kitchen, etc). House is in a great location. I suppose it is in liveable condition (has running water, roof is ok, etc)- but NEEDS a complete overhaul. How would something like this work as far as a mortgage goes? Would I qualify for a 203k and if so- is it a nightmarish process? Better to keep wait for something else to come on the market?If I even had the cash for repairs, could I get a conventional mortgage on a house like this? Right now there is zero inventory where we live in my price range (median home price is 1.2 million) hence the price of a home that really could/should be demolished. advice? THANKS!
Predicated on your existing Conventional pre-approval, I would advise that you utilize a Homestyle Conventional Renovation loan. These are superior to the 203k in many ways: Loan is based on Future Value (appraiser uses Contractor Bids to forecast valuation***) and Fees are lower with the Homestyle.
***Don't assume that you will see a dollar-for-dollar increase in post-rehab Value, it depends on the type of work being done.
Also, if the loan amount exceeds 80% of the Future Value, the Mortgage insurance on a Conv Homestyle loan will expire when the loan amount dips below 80% of the value. With a 203k, you would be stuck with a massive, massive amount of monthly Mortgage Insurance that would never expire.
$700,000 all in is a pretty hefty mortgage. How much down payment are you planning?
Jumbo loans often are not worth the premium...
I would make darned sure you absolutely can't find any acceptable home in the conventional price category...
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