Financing in 60612>Question Details

Elina, Home Buyer in 60612

What kind of loan would be the best if buying a foreclosure? Especially if the property needs to be fixed?

Asked by Elina, 60612 Fri May 2, 2008

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FHA 203 (K) rehabilitation loan. This loan combines the cost of buying the home with the cost of making the repairs. You can qualify with as little as 3% down. Loan amount is based on the "as-improved" value. You need to talk to a mortgage broker who does this kind of FHA loan to see if you qualify. Good Luck!
3 votes Thank Flag Link Fri May 2, 2008
I am purchasing a property in a similar condition, using an FHA loan. I'm not sure if it's 203k, but I know it's FHA: we're putting 3% down. Like you, one of the bathrooms was ripped up, but another bath was fully functional.

I still had to get a contractor in there and the bathroom put back together before the appraisal would go through. Also had to fix a problem with the drier to get the gas turned back on. From my experience, a ripped up bathroom won't pass FHA appraisal, even if there are fully functional ones. And yes, I had to pay the contractor, the bank would not do it or even give us a credit (although I squeezed some of the cost out of the seller's broker).

I hope it helps to hear from a home buyer, as well as mortgage brokers.
2 votes Thank Flag Link Mon May 5, 2008
definately a fha 203k loan, this will gove you purchase money and fix up money. beware of anyone else who asks for money up front and promises the world. stick with the best, most trusted and reliable lenders willbe able to asist you with an fha loan, if they cant, move on... good luck with your purchase.
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1 vote Thank Flag Link Thu Sep 11, 2008
203k is loan is best for you. Give me a call I can get you pre qualified. I am a mortgage broker in Illinois. 630-330-2229
1 vote Thank Flag Link Thu Jun 19, 2008
Charita, read up on the FHA 203(k) loan; it's a rehab mortgage that includes the price of the house AND the cost of rehab repairs. We're not talking about a regular FHA mortgage. -Inspector Mike Savage
1 vote Thank Flag Link Sat May 17, 2008
Any agent out there for the state of MI for buying foreclosures, found a foreclosure in Coleman MI needs everything fixed and going up for auction on June 7-10 of this year and starting cost if $5,000. If anyone can help or steer me and my husband in the right direction please contact me @ Thanks
Flag Wed May 28, 2014
No, Zira, I don't think you're nuts at all. You could do very well with the right property at the right price. Dino, you're right about a 203(b) [standard FHA loan] and foreclosures, but the question was about an FHA 203(k) loan, which is designed to purchase distressed properties. -Inspector Mike Savage
1 vote Thank Flag Link Sat May 10, 2008
You WILL need a contractor who has agreed to do the work as a condition for closing. The contractor does indeed need to be licensed and the lender is supposed to run a business credit check on the contractor. The 203k is not intended for the owner to do the work (unless the borrower is a licensed contractor). -Mike Savage, MJS Inspections, Inc.
1 vote Thank Flag Link Fri May 9, 2008
It will be the primamary residence. The 203 K loan sounds good. One of the answers below said -
"Just remember that to use this particular loan, please hire a licensed and very reputable contractor to assist you with the repair work"
IS that a friendly advice or an actual requirement to get this loan? What are the conditions of 203K? Do i need to contract a company or can i do the work myself?
1 vote Thank Flag Link Thu May 8, 2008
Cynthia Davis-Means, Flagstar Bank, (708) 466-8134 or (630) 925-4501
Fern Russell, Country Mortgage Services, (847) 368-9180
Tessie Krygier, Wells Fargo Home Mortgage, (708) 417-1950 or (708) 226-7401
Giovanni, Moonstar Mortgage, (847) 758-6666

Let me know if you need more. -Mike Savage
1 vote Thank Flag Link Thu May 8, 2008
If you had to repair the bathroom before it would pass appraisal then it wasn't a 203k. -Mike Savage
1 vote Thank Flag Link Mon May 5, 2008
In my opinion, determine the type of loan that you qualify for. Most of the customers and clients in our area are going to be using the FHA 203K loans. Just remember that to use this particular loan, please hire a licensed and very reputable contractor to assist you with the repair work.
1 vote Thank Flag Link Sat May 3, 2008
From the condition as you described it the property does not sound to bad. If the repairs could be done for less than 35,000 there is a 203k streamline loan that is a lot less difficult to deal with than the full 203k. I just closed a 203k streamline in April and my clients look to be done with all the work and be done by the end of May.
Document all your work and take photos of everything. You may be able to refi into a conventional loan when you are finished with the work if that would save you money if you document your improvents.
1 vote Thank Flag Link Sat May 3, 2008
I agree with Allison - the FHA 203(k) is a mortgage that includes the price of the home and the cost of repairs. You work with a rehab inspector/consultant [hint: I am one] that guides you through the inspection and recommends specific repairs. There's more info about this type of loan on my website (reference below).
1 vote Thank Flag Link Fri May 2, 2008
This thread is really old but I saw something in one of the answers that caught my eye...

I had a client recently who was referred to me after the loan officer with a different, unnamed bank, told her to fix up the property so she could get a 203B loan (normal FHA loan). She did and the seller sold the property to someone else after she put SIX THOUSAND dollars into the property.

Please let this be a lesson to everyone and a word of warning to NEVER DO THIS! Other loan officers out there, if you can't do one of these loans due to unavailability of the product or inexperience, do yourself and your client a favor and refer the deal out. The last thing you want is to explain to your boss why you lost a "former" client $6,000 and why they're suing your company -- Buyers, talk to your attorney, if you don't have one and aren't knowledgable of the industry, spend the $400 and get one.

As my mom would always tell me as a kid, "An ounce of caution is worth a pound of cure".
Web Reference:
0 votes Thank Flag Link Sun May 31, 2009
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0 votes Thank Flag Link Thu Sep 11, 2008
I wouldn't advise you to fix anything before closing. What happens if you don't close and you spent all this money to get an appraisel and be able to close. What happens if it doesn't appraise out? You will not get that money back, unless there is something in your contract that states you will be reimbursed.
0 votes Thank Flag Link Sat Jun 14, 2008
One isn't better than the other - they are different loans for different purposes. The 203(k) is designed for buying a distressed property or a property that you would like to have improved as a part of the mortgage. The costs to renovate or improve the property are included in your mortgage. The 203(b) is for straight-up purchases and only includes the cost of the house. -Inspector Mike Savage
0 votes Thank Flag Link Fri Jun 13, 2008
Here is a link right to FHA's webpage describing rehab loans.,717160&_dad…

Greg Zaccagni
0 votes Thank Flag Link Thu Jun 12, 2008
Which is better 203k or 203b?
0 votes Thank Flag Link Wed Jun 11, 2008
FHA is definitely not an option. Major fixer upper may require "cash on" deal, but check with the bank. Let them know the condition of the property first before placing an offer. It will save you time.
0 votes Thank Flag Link Fri May 16, 2008
"I'm so glad I got an opportunity to read the "Good-day, I am Mr. Bill Richards" commercial!!"

I was wondering if he's legitimate, then I was reassured by his intro that he is. -Mike Savage
0 votes Thank Flag Link Fri May 16, 2008
I'm not an appraiser and I don't think an inspector should offer an opinion as to whether or not a house is a "good buy", but in preliminary situations I have offered to do a "feasibility study", which is an inspection and an abbreviated report on the estimated rehab costs. Potential buyers have found this useful in determining whether or not to proceed and I do credit the cost of the feasibility study toward the price of the rehab consulting package. With the rehab cost estimates, the purchase price and an estimate of "after improved" value from an appraiser you should have all of the information you need to make a good decision about whether or not to purchase. -Inspector Mike Savage
0 votes Thank Flag Link Thu May 15, 2008
I'm so glad I got an opportunity to read the "Good-day, I am Mr. Bill Richards" commercial!!
0 votes Thank Flag Link Thu May 15, 2008
Inspector Mike - as a rehab consultant, can you give a good idea of whether its a good buy investment wise or not?
0 votes Thank Flag Link Wed May 14, 2008
Hard - as in impossible? Or it all depends on the appraisal?
0 votes Thank Flag Link Sat May 10, 2008
I don't think everyone realizes how hard it is to get an FHA loan for a foreclosure.
0 votes Thank Flag Link Fri May 9, 2008
A little off topic, but Mike, you are out there every day looking at places and prices, do you think it is nuts to buy a fixer (or anything) int his market in Chicago? There are other threads going on Trulia that suggest I would be nuts to buy, but surely the appraisal that is required for the FHA loan will be spot on in terms of market value right now?
0 votes Thank Flag Link Fri May 9, 2008
Does anyone have names of lenders that are still doing rehab loans, be it FHA or conventional? Apparently there is no one left out there... ANy advice would be great
0 votes Thank Flag Link Wed May 7, 2008
Is this going to be your primary residence or an investment property? If investmant you can forget about the 203k from FHA because that applies to primary residence only.

If you have 10% down with a credit score over 680 you should avoid FHA at all cost. The rates are low but they carry MIP and requier and upfront MIP of 1.5% of the loan amount. example 200k loan would cost an additional $3500 in closing costs! That money could replace a bathroom!

If the house has a sound structure, roof and all appliances are in working condition, your fine. Just because it is a foreclosure does not always mean its a disaster area.

If I can be of assistance with either a FHA or a Conforming loan write me an email and tell me what your goals are. Good Luck
0 votes Thank Flag Link Sat May 3, 2008
Are you in a financial difficulty or you need support in your finances? Do you want to raise an urgent finance for business or other personal use, Search no further, your very help is here. I am a private lender and has been helping people out on issues like this. I have testimonies for that. For more information contact me via email:
0 votes Thank Flag Link Sat May 3, 2008
Allison metions the rehab loan which is definitely a decent option. I specialize in foreclosures and there a couple of things to keep in mind. Appraisers generally require that all utilities are turned on in order to do the appraisal. By the way, to get them turned on and off are a buyer's expense. If all utilities are in working order, and the property appraises out, you can generally get a conventional loan. Also, foreclosures require 2-3% earnest money (certified funds only). Good luck!
0 votes Thank Flag Link Fri May 2, 2008
The appraisal will be done as-is. THe only problem is the house safe and sound and if it is livable. The general rule is this, working bath and kitchen with appliances which include stove and fridge and the overall condition is habitable. No presence of mold or anything hazerdous to your health.
0 votes Thank Flag Link Fri May 2, 2008
Based on what you told me about the condition of this unit I would think that you would have a hard time getting a loan for this property. The only way to know for sure is to describe its condition to your mortgage person and ask them if they would be able to help.
0 votes Thank Flag Link Fri May 2, 2008
FOr example - the condo has 2 bd, 2ba. One of the bathrooms is completelely ripped out and the other one has a bath but no sink. Could i move in there - sure. I could remodel the other bathroom later. It is also missing kitchen cabinets and appliances. So i could move in there - no problem. - but how about the appraisal?
0 votes Thank Flag Link Fri May 2, 2008
Could you or would you live in it in its current condition?
0 votes Thank Flag Link Fri May 2, 2008
HOW would you define - not suitable for living?
0 votes Thank Flag Link Fri May 2, 2008
Financing for a foreclosure property can be very tricky. If the appraiser goes out to the home and it is considered not to be suitable for living conditions you won't get a loan.
0 votes Thank Flag Link Fri May 2, 2008
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