Financing in Warminster>Question Details

Annette, Other/Just Looking in Warminster, PA

fixer upper

Asked by Annette, Warminster, PA Fri Apr 9, 2010

I'm looking to buy a fixer upper and can afford the down payment, but not the cost to fix it up. Does anyone have any suggestions?

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Brian,

These types of loans aren't rocket science but they can blow up if the mortgage broker is unfamiliar.
The buyer and seller needs to realize that these programs do take a little bit longer to put together. Even if the buyer is a strong buyer, the lender is going to focus on the property, the contractor and the construction and make sure that nothing is left to chance. They want to see references and insurance on the contractor, they want to make sure that the property is structurally sound and they want to make sure that all of the necessary repairs are going to be completed. The lender will scrutinize a buyer who is a weekend contractor. If you're not qualified to do the work, you will not be approved. Also as a buyer make sure the broker can provide references of satisfied clients using this program.

Alan
1 vote Thank Flag Link Fri Apr 9, 2010
Annette,
If you find a Fannie Mae foreclosure/fixer upper there's a HomePath finance product that rolls in renovation costs.

For other fixer uppers you can check out the 203K streamline (small repairs) and 203K renovation (larger repairs) loan programs through FHA.

You'll want to find a certified and licensed contractor having experience with these loan programs.

In general, the money is help in escrow and paid to the contractor at the completion. (There is some upfront money but it is a small percentage)

Ultimately, you'll be paying your mortgage payment based upon the sale price plus the renovated costs. If there's money left over from the renovation, you can apply it to the loan principal.

I hope this helps!

Stacy Carter
Home Appreciators Real Estate & Renovations at
Better Homes & Gardens Real Estate Metro Brokers
1 vote Thank Flag Link Fri Apr 9, 2010
A 203k renovation loan is by far your best bet as long as the after repair appraisal value is under $417k. Just be sure the loan officer/bank is familiar with how 203k loans work. They are a bit more complex than your average loan and not many lenders currently still work with these types of loans. If you need a point of contact to assist I would be more than happy to put you in touch with a local 203k expert.

Mike Bottaro
Realtor
HomeStarr Realty
Office: 215-355-5565
Cell: 267-307-2444
Fax: 267-282-5666
Email: mbottaro@homestarrinc.com
"Before You Schedule to Show, Call Bo"
0 votes Thank Flag Link Mon Oct 21, 2013
203k loan is a government program that enables you to purchase a home and finances certain upgrades and repairs as part of your mortgage.

For more details about 203k loan, visit http://www.cfs203k.com. CFS Mortgage and RenovationReady brings together more than 50 years of traditional and renovation lending know-how. Let their team of experts help you.
0 votes Thank Flag Link Sun Sep 29, 2013
Annette, There is the FHA 203k program as others have pointed out. You will have to qualify for total amount including price and cost of repairs so figure that out . You should really sit down with a lender who will explain it to you and you will know exactly how much money you will need.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Sun Apr 18, 2010
Annette,

Also make sure your agent is familiar with the 203K program etc as it involves some extra attention to detail during the transaction. Not rocket science but the agent needs to be familiar with the process and in touch with the mortgage rep a bit more often than the "run of the mill" transaction.

Good luck with your home search.

Brian Luce - ABR
Weidel Realtors - Doylestown
215-348-5600 x 122
0 votes Thank Flag Link Fri Apr 9, 2010
I have referred several deals similar to yours to Ken Lazowski at First Interstate Financial. He is an expert in renovation loans, including the FHA streamline k (repairs under 35k) and the traditional 203k. He can be reached at 800-999-2489 x7972 or klazowski@fifcorp.com

Here is a blog I posted on the subject: http://activerain.com/blogsview/1437935/fha-203k-or-fannie-m…
0 votes Thank Flag Link Fri Apr 9, 2010
Yes Annette,
I have an FHA loan program where you can finance 96.5% of the purchase price, some of the closing costs and all of the costs to renovate the property. It’s a great program for first time homebuyers looking to buy a fixer upper and right now the rate is 5.5%.

Alan
0 votes Thank Flag Link Fri Apr 9, 2010
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