Thread: foreclosure buying

Jayno,

It is my understanding since you are financing with FHA the home you purchase needs to be habitable "as-is." With the well not working in FHA's eyes the home would not be habitable. Ask your lender if an FHA 203k would work in this case?

I know as a buyer you can become very frustrated and often ask why wouldn't the bank......Banks are not in the business of owning real estate, they don't know the first thing about it. All properties are sold as-is, where is and they can't disclose much about the property because they have never lived there.

Always make the purchase contingent on an inspection.

Good luck!

Thanks for your suggestion. I ran it buy my mortgage guy and he said he doesn't deal with that particular type of FHA loan and that a lot of places are shying away from the 203K(is that true?). I think I am going to find someone who does. In the meantime I found a guy who does plumbing and wells so I am going to bring him up to the house to check it out.

Try the 203k loan. You might be able to borrow the money needed to fix the well and broken pipes. Definitely get a home inspection.

I would be surprised if the home wasn't winterized... Typically that is the first thing they do when they take ownership of a property.

You can always do the inspection. The bank won't fix anything but atlteast you see what you have before you close on the house. And if major issues are found, you can walk with the right provisions in your contract. In the end, you would have only sacraficed your time and some money for the inspection.

I am interested in what the inspector says about the well. With the huge amount of homes out there why go through the headache of fixing the well. I am sure there are other deals out there without the well problem.

Banks don't want to disclose anything. They want you to sign off rights to being informed of defects etc. Plus if they never lived there most of the defects they would not even know about anyways.

On the last 2 FHA 203b loans I closed on bank owned homes the bank repaired items prior to closing. Those items included: Tearing off a roof and replacing it, scrapping and repainting an entire garage, and replacing drywall and ceilings in 2 rooms of a home.

With that being said it is possible that a bank will consider making this repair prior to closing. It is a rarely accepted request though.

FHA 203b financing requires an appraiser to inspect the home and additional problems may exist. Nearly all issues must be repaired and re-inspected before closing. The 2 transaction I described above were a very lengthy and unpleasant experience with an amazing result. The price of the home was not adjusted on either which left both buyers with upgrades to the home that they did not pay for.

Your best bet is FHA 203k or 203k Streamline depending of the amount of repairs required. Both loans will allow you to upgrade and customize the home. Streamline is easier and less expensive because no consultant is required.

However. 203k is hard to find and a higher cost (rate .50-1.00% higher).

Another option almost no one is aware of is a USDA loan. This loan actually allows a buyer to make repairs to the home after closing using up to the full appraised value (not purchase price). It has no mortgage insurance. It is 102% financing (2% funding fee) It does have income and geographical restrictions.

Hello there Jayno!nice information you got there,but I'm kinda curious about it,foreclosure is getting higher and higher now,hope you're not having a hard time about this.

Thanks for all the helpful information. I applied for a 203k loan today so we'll see what happens.

Is this a Fannie Mae REO?

There is a new program being released that only requires a 3% down payment, no PMI, 6% seller concessions, and also 1 more allowing renovations.

Fannie Mae is finally trying to get the bank inventory sold with this program.