Zillow Advice: Home Buying - Possible to buy beat up house with no construction/FHA 203(k) loan?

I'm dealing with a short ...

Wed, 03 Jun 2009 02:55:00 GMT

I'm dealing with a short sale right now, and the mortgage originator in our office recommended I send my buyer to a locally owned bank with more flexibility. I did that, and she will be getting a non-conforming loan of the type investors get. The rigid FHA appraisal guidelines will not be an issue. Of course, the interest rate will be higher, but when the work is done, it can be refinanced. It will be worth more, so hopefully private mortgage insurance will not be needed.

Yea, with those repairs...Conventional ...

Wed, 03 Jun 2009 02:44:00 GMT

Yea, with those repairs...

Conventional tends to overlook the cosmetic things, but the more serious repairs are an issue with conventional, too.

Is that true Bob?I bow to ...

Wed, 03 Jun 2009 02:38:00 GMT

Is that true Bob?

I bow to your greater experience.

It seems a shame that people that want to do the work cannot find a lending facicility that will meet their needs.

nvchaz, I don't think this ...

Wed, 03 Jun 2009 02:28:00 GMT

nvchaz, I don't think this person could even buy this home with a conventional loan.

greig, you will most likely need a rehab loan based on your description. The only other way to buy this home free and clear with no one looking over your shoulder is by cash.

Not only that:I'm finally ...

Wed, 03 Jun 2009 02:02:00 GMT

Not only that:

I'm finally in escrow on a house that fell out on the pest inspection. They wanted a visqueen vapor barrier in the crawlspace.

I said OK no problem -- I'll buy 6mil plastic and shimmy into the crawlspace and spread it. They said no, had to be a licensed contractor. So, I said OK, you pay for it then and they said yes and it will cost them $350 and a weeks delay in the closing. I could have done it in 2 hours with a $75 material cost.

Stupidity.

I'd tried to buy a fixer ...

Wed, 03 Jun 2009 01:53:00 GMT

I'd tried to buy a fixer with an FHA loan and they wouldn't approve it. I could have fixed the problems with two days work.

I think you have to hire a licensed contractor and have the work done within 90 days on an FHA rehab loan. No way am I gonna do that when I can do it myself for 1/3 the cost.

The only way you can do fixers is with a conventional loan with at least 10% probably 20% down. That really p*sses me off because there are a lot of people willing to really work to improve property. But I want to do it on my own terms and not have some contractor walk in and eat up all of my equity.

I guess the FHA thinks we are all idiots who can't fix our own homes.