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This sounds like a lender that doesn't do 203k loans or doesn't want to do a 203k loan. You should do the 203k loan first. The rate is higher and will carry mortgage insurance since it is a type of FHA loan. If you do it first and the equity position isn't as good as they are telling you you can at least streamline in to a standard FHA loan at a lower rate. If the equity position does turn out to be as good as they are stating (20-30% LTV) then you can refinance into a conventional product and remove the mortgage insurance. I think you should at least check with a lender that specializes in 203k loans in your state. I specialize in 203k loans and would be happy to advise you even if you are not in Washington state.
Seems odd that you aren't just closing AS a 203K loan...and also-a lender may 'gift' you back closing costs so you have less out of pocket but generally your rate will be higher. I'm curious as to why you just aren't closing your home as a 203K so that when you get keys you can start on the work immediately??? Or are you possibly purchasing and then hoping for instant equity...then going to refi as a 203k loan?Maybe it is the way the question is worded...but this is confusing. And 203k's are one of my go to products...
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