Home Buying in 19104>Question Details

Alisa Miller, Home Buyer in Philadelphia, PA

Conventional Loan For Fixer-Upper?

Asked by Alisa Miller, Philadelphia, PA Sun Aug 1, 2010

HI,
I want to purchase a property in need of rehab. I can put 10% or more down as needed. I used to renovate for a living, and have plenty of skilled help. My question is: What is expected in order to meet appraisal guidelines for loan approved? CanI buy a reasonably priced investment property and gradually bring it to its former splendor, or do banks frown on this?
By the way, the purchase would barely reachan 8% debt to income ratio, including all other of my monthly expenses.
Thanks!

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Answers

9
Hello Alisa,

Appraisers want to see a house that is safe sound and secure. Roof with no leaks, decent electrical system and plumbing. All utilities in working order. No mold or termites. Carpets in decent shape and no holes in the walls. Properties that fit this description most often are estate sales where the former owner did not upgrade the property but it is liveable. You can find short sales and foreclosures that are acceptable to the appraiser but it is more common for these types of properties to require some types of repairs. If you use any financing other than some type of rehab financing ( whether it be 203k or homepath financing) the appraisal issues must ebe addressed prior to the loan closing.

Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010 & 2012
NMLS ID 143960
0 votes Thank Flag Link Mon Sep 23, 2013
Sounds like 203k is good for you. 203k is a very good program however, getting it is not the easiest process.Look for a lender with great experience about the program.


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.




-----
Dana Lindberg
CFS Mortgage - http://www.cfs203k.com
0 votes Thank Flag Link Sun Sep 22, 2013
Thanks again for the advice.
I am a first time home buyer, and this will be my home. I'm not flipping it.
I'm just old fashioned. I would rather invest hard work and patience itowards a diamond in the rough, rather than spend a small fortune on an unremarkable property with all the bells and whistles included.
I will look into 203K.
Thanks!
0 votes Thank Flag Link Mon Aug 2, 2010
As a general rule FHA and VA appraisals are more strict then conventional loans (and if you have 10% down you should be fine with conventional loan). Not sure how it is there in PA, but with a flooded market of short sales and REO (foreclosures) the appraisers understand that some houses will need some work. The problem you may find, when you go to flip, buyers are savy. I have had several that looked at houses, liked them and ready to put in an offer. However, when I pulled up the history on the property we saw that owners bought and flipped. Some clients wont have none of it, even if you remodel and add real value. It might not bother others, but it has with most of my buyers. In this market, takes a lot of "guts" to buy and flip but it is getting done. Some are making $, but the ones who are most are buying properties at a "Trustee's Sale", which means they are buying cash, fix it, and then flip it. Course, you doing the work yourself helps. Good luck.
0 votes Thank Flag Link Mon Aug 2, 2010
Hello Alissa,

You can find information on a 203k loan at my company website (see below)
If you have any other questions please give me a call. I do quite a lot of 203ks these days and can guide you through the whole process.

Regards,
Alan Openshaw
Cornerstone Lending Inc
215 953 0800
cell 267 992 7276
0 votes Thank Flag Link Mon Aug 2, 2010
Thanks for everyone's input. All of your answers are helpful. I plan to make the property first home purchase. It has great bones. I was anxious about the amount of time I may need to restore it. Sounds like 203K is the way to go!
0 votes Thank Flag Link Sun Aug 1, 2010
You should sit down with a lender and discuss this. Alan Openshaw has already answered your question.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Sun Aug 1, 2010
Wells Fargo has loans for rehabbing. I'm assuming it is non-owner occupied, in which case you can't use a FHA 203k loan. You could also go with hard money, If you contact me I'll give you who I use when I rehab. Here is the Wells Fargo Rep's info:

Barbara A Marchette
Home Mortgage Consultant
Wells Fargo Home Mortgage
15 Commerce Blvd. Ste. 302
Succasunna, NJ 07876
ph(973) 598-8918
(866) 359-8061
barbara.a.marchette@wellsfargo.com

Hope that helps.
0 votes Thank Flag Link Sun Aug 1, 2010
Alisa,

In order to get conventional financing the property needs to be in liveable condition. All mechanicals ned to be wortking. There has to be no leaks in the roof.There has to be wallls floors and windows. They don't have to be in great shape.Peeeling paint howver can be seen as a safety issue.
There are banks that will do rehab loans but I do not know as completed appraised value. if you have other property,with equity in it, I could cross collateralise and finance the whole thing.

Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa
0 votes Thank Flag Link Sun Aug 1, 2010
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