203k alternative?

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Martha

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Post Posted: Mon Mar 03, 2008 11:31 am    Post subject: 203k alternative?
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I found a house that I want to purchase in PA. It is a historic farmhouse built in 1800 and literally needs about 185k of work. There is asbestos, mold, structural issues and a ton of plaster, roofing, and utility issues. That said, it is owned by a bank due to foreclosure. They have owned it for 6 months and the price has dropped about 130k in the past year (the owner tried to sell for about 6 months).

The asking price is 370k but I know I can get the bank to release it for less, the question is how much less and then how do I rehab it on top of a mortgage loan? I cannot sell my current house until the rehab is done so funds are not available to do it that way. I had a brainstorm but do not want to move further into the process unless I can get some feedback first. I may be completely off mark with my idea but it is worth putting it out there to see if it is an option.

I want to finance the property through the bank that owns it for a total of 240k. However, I want 185k of that amount to be a home equity loan. A mortgage of 55k and home equity of 185k is only 65% LTV, the combined payments will be within my qualification and the owning bank still holds both loans for 240k. Can I do this? The bigger question is, do you think the bank will do it?
Icon Mini Profile Jeanette
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Post Posted: Mon Mar 03, 2008 4:55 pm    Post subject:
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Martha,

This is probably going to be a question for the bank because not all banks operate the same. Sounds like a big project and possible but contact several banks and see what they will be able to offer. Or find a loan officer who can be of help to you.

All the best with that project.

Jean
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Post Posted: Mon Mar 03, 2008 8:18 pm    Post subject: Renovation Lender
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Hi Martha,

This doesn't sound like something a bank would do unless it's a renovation loan. My name is Will. I am a renovation specialist with Wells Fargo Home Mortgage. You can use our purchase and renovate program to achieve your objective.

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Post Posted: Mon Mar 03, 2008 8:28 pm    Post subject: FHA 203k
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I neglected to mention that FHA 203k maximum renovation cost is 35K. They also will not allow structural renovations.
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Icon Mini Profile Mike8
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Post Posted: Sun May 31, 2009 9:59 am    Post subject:
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Will, good comments. I agree that this is a renovation loan. As a consultant if you don't know the amount of the rehab you can contact a local consultant and ask them to do a 'feasibility analysis' in which they will tell you what your approximate cost to fix it up would be in very short order and for a small fee.

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Post Posted: Wed Jun 03, 2009 2:06 pm    Post subject:
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mike i hope you don't mind me pointing out that your response is a little late. the original post came in on 3/3/08 and the post you responded to was the same date.

your information and opinions are good...we've already seen that. i don't want you to get caught in the trap of answering questions that have grown full-length beards, however.

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