Conventional Loans

Asked by Canaan Zeigler, 66226 Tue Dec 18, 2012

I am trying to make an offer on a house that has some structural issues. I have a conventional loan through Capitol Federal. The buyers agent for the property insists that I need an FHA203K loan due to the structural issues. Lets assume the house is 100,000 and I have 50,000 cash. I would make a down payment of 20,000 and get a loan for 80,000. Lets assume I get an estimate for 10,000 to make repairs. Capitol Federal could hold 10,000 in escrow while I make the repairs and then I would get the 10,000 back upon completion? Is this correct? This house is a foreclosure.

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Canaan Zeigl…, Home Buyer, 66226
Tue Dec 18, 2012
Thanks for the replies, definitely don't want to make repairs before owning. I have got an application for a FHA203K in progress, and that seems the way the buyer agent is pressing me to go.
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The buying process should be a partnership between you the buyer, your lender and the Realtor. Good Luck.
Flag Tue Dec 18, 2012
Neva Smith, Agent, Ottawa, KS
Tue Dec 18, 2012
I think you just need to visit with Cap Fed, even conventional loans are getting stricter - but you just explain to Cap fed what shape the home is in and ask them if they can make the loan.
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Tim Moore, Agent, Kitty Hawk, NC
Tue Dec 18, 2012
It makes no difference that the house was once foreclosed, it is owned by the bank now and is bank owned.

A 203K rolls in the cost to repair in the loan and pays the contractor to do the work. It is unclear if your conventional loan will be approved if repairs are needed. I am assuming the bank will not make the repairs so you can fall into the catch 22 of who will. It is never a good idea to make improvements on a property before you actually own it in case something happens. The 203K is designed to help work around that issue and might be your best idea. If the conventional lender requires the repairs to be made the bank might have to do them and then ask more for the house. Welcome to bank owned home sales.
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