I'm interested in a house that needs a kitchen

[Anonymous]

Sounds odd I know. This house is real cheap and not sure if I can get a loan for it or not. The kitchen is large, but has nothing in it-no cabinets or appliances. The roof is brand new, brand new tile flooring throughout and on an acre on a spring fed lake. More than worth the effort. 

What I need to know is, is it possible to get a loan for this place as a primary residence and a line of credit to cover the needed improvements. I have an expert home improvement guy (worked on condos and mansions and I've seen his work). He has brand new cabinets he was going to put into a house, but homeowner changed their mine and now will sell them to me at a reasonable price, and install them. 

The 1800 sq. ft. house is only $34,900. as is, bank owned. I have been working on my credit for the past 6 months. It went from a 500 to 623 and should be 40 points higher at end of this month. I have 1 CC $1100. paid down to $60. 2nd CC $300 paid down to $21. and 3rd with very old age over 12 yrs. paid off 5 years ago. Car payment 2 yrs. old always paid on time. 

Why are we anxious to move? We are renting and the landlord has not paid the mortgage on this place and we are 3 months into foreclosure now. So I would like to have a place to go to before we are kicked out. We live in FL.

[GregB]

Most purchases of homes like this are cash.

I have two customers that loan on homes like this and know of at least one other lender that would loan. The down payment is 50-60% and the interest would be 10-12%. The lenders would check your credit but are more interested in equity in the home. Obviously, these are designed to be loans for a short period and are assumed that the house will be resold or have a normal mortgage once the house is "done".

I would assume the system works about the same in the other end of the country where you are.

[Anonymous]

Thanks! I was wondering how this would work. I'm definitely not a cash buyer. I am in the process of being pre-approved for a loan, but saw this place and thought I'd ask. 

[StartingOver10]

---

@GregB wrote:

Most purchases of homes like this are cash.

I have two customers that loan on homes like this and know of at least one other lender that would loan. The down payment is 50-60% and the interest would be 10-12%. The lenders would check your credit but are more interested in equity in the home. Obviously, these are designed to be loans for a short period and are assumed that the house will be resold or have a normal mortgage once the house is "done".

I would assume the system works about the same in the other end of the country where you are.

---

Yes. That is exactly how it works here in Florida. I sell homes like this too.

The most common way, if you don't have all of the cash is to get a collateral loan and the terms are exactly as described above except the rate is 10% to 15% with a min of 35% down and a 3 yr balloon and a 6 month pre-payment penalty.  All of these terms depend upon the investor. Some of the investors have a minimum amount that they will lend. 

It is actually easier to get one of these type loans if you are an investor. They don't want to give these types of loans to people who will live in the property.

You can also get a regular 203k FHA loan to do rehab the house since you will be a owner/occupant.

[Anonymous]

Thanks! Thats what I was thinking about. Not sure of the restrictions on a 203k loan, but I'll find out more next week since it is Easter. This place just came on the market yesterday and I know it will go fast in a bidding war. Its funny, most homes on the market now are in need of some kind of repair...appliances missing, A/C usually is missing. In fact the first thing I look for in a home now is if the A/C unit is there, how big it is or age of it and if there is a decent roof. Everything else is icing on the cake. And unfortunately I'm in a high market area, South Lake County, FL.

[StartingOver10]

I'm a little south of you - Palm Beach County.

Find a good FHA 203k lender. It is a more difficult loan in terms of paperwork and time. You have an advantage because the banks prefer to sell to an owner occupant. Get your agent to show you paired comps so you know the value in its "as is" condition and an approx value based on the improvements. An appraiser will give you a better idea, but the paired comps should give you a very good idea of value without spending the appraisal money up front.

[webhopper]

FHA 203k loan would be the way to go on this house...  I agree with other posters.