Your questions and concerns are not unique to your area. As a fellow resident of Elyria, I share your concerns. Our City is highly under capitalized right now even after our average home prices fell another 10% in 2011. The long term unemployment and under employment have created a ticking time bomb for our community.
Options available to you.
1) Refinance using a 203k loan as stated earlier. This is something completely dependent upon the lender and their appraisal before and after repairs are made.
2) Find someone who would be willing to finance the repairs for a few years in exchange for equity in your home (equity participation) secured by a lien, but have a balloon payoff at the end of the period.
3) Sell your home to an investor via a Short Sale. Depending upon the home, the lender, the liens of record and other factors, we could prevent it from becoming another empty vacant home.
4) Allowing your home to go into foreclosure hurts far worse than coming to your lender hat-in-hand and executing a Short Sale. Many lenders will forgive the remaining balance and/or send you a 1099 for the forgiven amount. Right now that amount is still forgivable by the IRS under the current tax law. This may change in future years but is still current.
We have investors looking for such homes right now. If you wish to know more, feel free to call or email, no obligation.