elisa r asked:


We’re looking at purchasing a forclosed home. They’re asking $90k, and it needs about $60k in work still. I’m not really sure how financing this would work. The land alone that the house sits on is worth about $90k and the amount the bank forclosed on was $350,000. So I’m sure that there will be equity in it, but not sure how much. Would we just finance the home and take out a personal loan until the repairs are done and then refiance? Would we take out the mortgage and then a construction loan? Or would we finance the home, then refinance right after? I am lost. THANKS!

DEVON

2 Responses to “Is there a way to finance a home with repair cost in the loan?”

1. Steve D on November 2nd, 2009 12:12 am

   SEAN

   First you need an appraisal. If the house appraises for more than the $150K ($90K selling plus $60K repairs), then you can finance the whole package through a mortgage. In the best of all worlds the house will appraise for $200K or above which would put you above the magic 20% equity line making PMI a moot point.

   Then take $90k and pay the party holding the foreclosure and use the remaining 60K for the repairs. Don’t forget to add in closing costs (probably in the range of 3-4% of the appraised value.

2. Noneya on November 2nd, 2009 4:15 am

   ISIDRO

   There is a specific loan program for this, it’s an FHA 203k loan.
   There are very few lenders who offer the full version, which is what you need based on the cost of repairs(60K).
   It sounds like the place needs a lot of work which may cause you problems with regular financing options.
   Let me know if you need more info.

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