Foreclosure in Sierra Vista>Question Details

Sylvia & Per…, Home Buyer in Sierra Vista, AZ

I'm interested in buying a house that is a foreclosure. My bank doesn't pre-qualify us because the house has

Asked by Sylvia & Perry, Sierra Vista, AZ Tue May 20, 2008

no flooring and some of the walls are not finished. We pre-qualify for other fixer-uppers with flooring. Are they any companies that would give us an honest mortgage for that house?

Help the community by answering this question:


A 203K is probably your best bet. Some other banks (around my area, typically the smaller ones) offer their own programs that combine rehab money and purchase money.

One other possibility, if the house is cheap enough, is getting a hard money loan for the purchase and rehab. Then you'd refinance with a conventional lender. A hard money loan is very expensive--around here it's about 5 points and 12% interest for a maximum of 6's the points that really hurt--but the loan is made on the after-repair value of the property. So, for example, suppose a property after repairs would be worth $500,000. A hard money lender will lend about 65% of the after-repair value, or $325,000. But if you can buy that house for $250,000, you'd have money for the points and for the repairs. You have the work done, apply for a conventional mortgage, get it reappraised at $500,000, and you're fine. (Some lenders might have a problem with seasoning, but that's a different issue.)

Hope that helps.
0 votes Thank Flag Link Wed May 21, 2008
Don Tepper, Real Estate Pro in Burke, VA
You should look at the FHA 203K loan it's not new but most brokers stay away due to lake of lack of familiarity. Also have your Realtor or mortgage broker attach a letter to the offer. Bank owned and pre-foreclosures are very carful about where the $$ is coming form and they may not be familiar with 203k’s.
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0 votes Thank Flag Link Wed May 21, 2008
You need a rehab loan. Just talk to a loan officer. If they are worth their salt they will know how to get this done. Conventional Fannie Mae loans require that the home be habitable.
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0 votes Thank Flag Link Tue May 20, 2008
It might be possible to get an FHA 203K loan. Im curious if you talked to you bank about financing for that? I don't know how much the repairs would cost but I think that would be a viable option. What kind of financing were you looking to obtain? Does your bank do FHA loans?

Brent Bester
Mortgage Professional
0 votes Thank Flag Link Tue May 20, 2008
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