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Loan Advice

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Anonymous
Not applicable

Loan Advice

We are looking at a foreclosure home that needs MAJOR repair. Foundation, new furnace, roof etc. Its a bargain we could but the house for about 50K. 1600 sq ft. The realator says our only choice is a construction loan? Could this be the case? If so what options are there for construction loans? How difficult are they to get? My wife loves this house so Ill give it my best shot Smiley Wink
Message 1 of 6
5 REPLIES 5
granny031350
Established Contributor

Re: Loan Advice

my daughter is purchasing a HUD foreclosed home with an FHA 203b loan.  She is getting the 5000 streamline loan, but they do have a 203b loan for larger amounts.
 
She needs a new furnace and a new kitchen/bathroom/garage door. AND  ALL of the plumbing (copper) was stripped from the home.  It does have a small mold issue in the bedroom closet.
 
But it is a good buy for her.  1/2 price of value of other homes in same sub.  Eventually will need a new roof.  Hers is typical Detroit home, 3 bedroom, small ranch, all brick, detached 2 car garage, fenced yard.  But for 55,000 it is a steal! (her neighborhood homes are selling for 125,000) 
 
Her Dad and I are helping her rehab this home.  Lots of work but a great opportunity for her.


Message Edited by granny031350 on 09-04-2008 07:32 PM
Message 2 of 6
Anonymous
Not applicable

Re: Loan Advice

I have heard the FHA 203 loans are alot harder to get closed and done, but can be a great way to purchase a place.  Beware though, you have to go through contractors and such.  They are not real happy about do it yourself jobs.  For those, I believe you have to do all the work at your own expense and then once an FHA guy approves of it, they will reimburse you for the costs (product only, not labor)  I could be wrong on this though.
Message 3 of 6
granny031350
Established Contributor

Re: Loan Advice

you are partially correct. The streamline can be done by yourself, but is limited to 5000.   The other one is definitely with contractors and does take a little longer to get done because of the work being done, and then being inspected. 
Message 4 of 6
Anonymous
Not applicable

Re: Loan Advice

I think with alot of the 203 loans, the probelms is that in this depressed real estate market, you can usually buy a home that is already fixed up for cheaper than buying a home and paying someone to fix it up.  It's a different story if you do the work of course, but the larger 203 loans do not make that easy as you would have to take the time off work (there are very strict timelines on getting work done), pay for all materials, get inspections, and then at some point get reimbursed for the materials only.
 
Also, some people think that they will only have to qualify for the original loan, not the construction part of it.
 
It is easier to qualify for a $150K FHA loan than a $100K loan with 50K in repairs under a 203 program.  Also, some FHA lenders do not deal with the 203 programs therefore making it harder to shop around and get the best deal.
Message 5 of 6
DallasLoanGuy
Super Contributor

Re: Loan Advice

look into the FHA 203K
they are a pain. a little higher rate/fees.
 
Retired Lender
Message 6 of 6
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