Profile picture for mlbarton77

How to finance a bank owned property

Do any lenders offer a purchase and renovate loan that I could use to purchase and renovate a bank owned home? If so, where should I look? Also, would it be possible to make an offer and earnest deposit on the property to buy some time to get the financing?
  • November 09 2013 - US
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Answers (4)

Profile picture for JeffSmithHomes
Yes there are loans that incorporate extra cash for repairs. Your Buyers Agent should be able to guide you to a good reputable lender that can help you with renovation loans.
  • November 10 2013
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Profile picture for CallTheSisters
Your buyers agent can help you with all of that.  They can refer you to local lenders offering renovation loans.  They can structure your offer contingent on financing. They can help you arrange inspections and if necessary terminate the contract in the event the work is more than you can afford to do.

Contact a local buyers agent.
  • November 10 2013
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203k loan is designed to help home owners who are in need of financial help for home repairs, renovation, and even new purchase. Get help from the experts. A good team on your side shortens the closing time by weeks.
  • November 09 2013
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Sure; the FHA 203k loan program is commonly used for REO properties in need of repair, but the lender is going to want to see a strong likelihood that their investment will be recouped, as always. For instance, if the home costs $50K, needs $25K in repairs, and will likely be worth $90K once the repairs are complete, that's a pretty solid deal. However, there are certain qualifications for the 203k loans with regards to credit, type of building, etc. that can vary a bit depending on the situation. (HUD's info on the 203k program is here.) 

As far as buying time to find financing, you're far better off getting more information about the 203k program first - start by searching the web for lenders in your area that are amenable to working with FHA loans - and getting the financing situation handled before any money changes hands. This is DEFINITELY something that you'd want to speak to a finance professional about before going forward, but risking an earnest money deposit in the hopes that you can buy enough time to get the right loan for the situation is unlikely to be anything that a reputable professional would endorse. (Or, while rehabbing REO properties can be exciting - and is something very near and dear to my own heart - you should first take a deep breath and look at the numbers and make sure that you don't make an overly emotional decision when your financial well-being and housing situation are potentially at risk.)

So while your general idea of rehabbing an REO property with a loan is a fairly good one, it IS something that merits quite a bit of number-crunching and information-seeking beforehand; please don't take this situation lightly!
  • November 09 2013
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