Posted on: 14th Jul, 2010 09:47 am
We've found wonderful house that we'd love to own but it needs some repairs. Since part of that is leveling the house (pier & beam), we're not sure how to go about financing it. The sellers are being something of a butt about the process, so we're looking for options that don't involve them - preferably "out of the box" ideas like a much reduced selling price, etc.
I've been told that any house that needs "foundation work" won't qualify for an FHA loan. My middle credit score is 640 so I don't necessarily need FHA financing. However, it's an older house and needs renovation for things like the kitchen and bath. Things that might disqualify it for a "conventional" loan since I suspect it might be graded as "fair" condition.
Because we're skilled in this sort of work, we want to do most of the renovation ourselves. The biggest cost of anything like this is the labor and we're quite capable. I'm a Journeyman Electrician so I'm comfortable handling my own electrical stuff and I'd definitely rewire the house to accommodate a more modern use of electricity - more outlets per room, higher amperage, etc. We'd like to pay for the renovation out of our pocket as we go but we need to get the place bought first.
I've been told that the 203K financing probably isn't an option since we wouldn't be allowed to do any of the work ourselves.
I've been told that any house that needs "foundation work" won't qualify for an FHA loan. My middle credit score is 640 so I don't necessarily need FHA financing. However, it's an older house and needs renovation for things like the kitchen and bath. Things that might disqualify it for a "conventional" loan since I suspect it might be graded as "fair" condition.
Because we're skilled in this sort of work, we want to do most of the renovation ourselves. The biggest cost of anything like this is the labor and we're quite capable. I'm a Journeyman Electrician so I'm comfortable handling my own electrical stuff and I'd definitely rewire the house to accommodate a more modern use of electricity - more outlets per room, higher amperage, etc. We'd like to pay for the renovation out of our pocket as we go but we need to get the place bought first.
I've been told that the 203K financing probably isn't an option since we wouldn't be allowed to do any of the work ourselves.
The full version of the 203k program is fine to do foundation work with - however you should strongly consider if you want to buy a home with foundation issues as they can easily go into 6 digits for repairs. The structural engineer assessment would likely run several thousand dollars alone. If you are a licensed electrician then you should be able to complete the electrical portion of the renovation, but if you don't posess a license then you are right, most likely you would not be permitted to do any of that type of work. Lenders want to make sure it's done right and if you don't have strong documentation & evidence you have done this in the past, lenders won't be willing to roll the dice to see how you do.
If doing the work yourself is an absolute requirement, then I suggest hard/private money which wouldn't require the in depth contractor review process a 203k or conventional construction loan would require. From your posts I see you aren't a newbie when it comes to mortgage financing, so I imagine you are aware of the higher interest rates & fees that hard/private money has. Since these are much higher risk loans, the terms are justified.
If doing the work yourself is an absolute requirement, then I suggest hard/private money which wouldn't require the in depth contractor review process a 203k or conventional construction loan would require. From your posts I see you aren't a newbie when it comes to mortgage financing, so I imagine you are aware of the higher interest rates & fees that hard/private money has. Since these are much higher risk loans, the terms are justified.