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We are looking to buy an extreme fixer upper, mostly because we like the location and we can fix most things ourselves so the repairs will be semi-affordable.
We can scratch together the 20% down. However, that house will not pass any sort of home inspection. We can't get a vacant land construction loan because there is a house on the property so it isn't vacant land. We can't get a regular mortgage because the house is not in good enough shape.
We would like to borrow enough for the house plus to re-roof it. The rest of the repairs we can do ourselves.
Anyone know of a lender who lends on these sorts of houses?
I didn't actually end up getting the house, but I did get pre-approved for such an arrangement by BB&T--it was a mortgage/construction "single close" loan, which basically functions as a construction loan in a lot of ways (you start with interest only on the home purchase price, have draws on the construction portion, then all rolled together).
My understanding is that if you have 20% down that's a better way to go than the FHA loan, but others may know differently.
BB&T seems to be primarily an East Coast sort of mortgage company. I don't think they would do a mortgage in Hawaii since their website made note of where their "service area" was. It does sound like the sort of loan we'd be looking for, I guess we just need to persuade them to open a branch office over here and expand their service area.
I'm not a lender, nor am I an agent, so I apologize in advance if this is incorrect, and I'm sure someone will correct me, but if you have the 20% down, can't you just do a conventional loan? I didn't they they had lender required inspections.
I always thought repair issues were only a problem on VA or FHA loans.
We are looking to buy an extreme fixer upper, mostly because we like the location and we can fix most things ourselves so the repairs will be semi-affordable.
We can scratch together the 20% down. However, that house will not pass any sort of home inspection. We can't get a vacant land construction loan because there is a house on the property so it isn't vacant land. We can't get a regular mortgage because the house is not in good enough shape.
We would like to borrow enough for the house plus to re-roof it. The rest of the repairs we can do ourselves.
Anyone know of a lender who lends on these sorts of houses?
Your local lender could do a construction loan. It does not have to be vacant land. They will probably want 20%-30% of the total project cost for a down payment. Total project being the price of the property + the price of improvements.
Once completed you can refinance to a 30 year fixed conventional.
I'm not a lender, nor am I an agent, so I apologize in advance if this is incorrect, and I'm sure someone will correct me, but if you have the 20% down, can't you just do a conventional loan? I didn't they they had lender required inspections.
I always thought repair issues were only a problem on VA or FHA loans.
To do a Fannie Mae/Freddie Mac loan the home basically needs to be intact in "move in" condition. Many of the foreclosures on the market will not fly conventional and have to be purchased with cash or private bank money.
I'm not a lender, nor am I an agent, so I apologize in advance if this is incorrect, and I'm sure someone will correct me, but if you have the 20% down, can't you just do a conventional loan? I didn't they they had lender required inspections.
I always thought repair issues were only a problem on VA or FHA loans.
In addition to Tim's point, conventional loans typically are only for the purchase price of the home, not the renovations. For that you need a separate construction loan (or, something like the loan I had gotten qualified for that combined the two).
If, for example, you were buying a 100K home and planning to put 100K in renovations for a complete overhaul, a conventional loan would only be for the purchase price, the construction loan would require a separate approval process (including your plans, etc.). The inspections on a construction loan are at the "draws," or the stages when the contractors get paid.
If the home will not pass lenders guidelines, then a conventional construction/rehab loan would be one solution, or FHA's 203k loan program also fits the bill.
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