April 15th, 2009 10:39 AM by Lisa Carey
I've been running into this home buying problem a lot lately: I have a buyer who wants to get an FHA loan so he can put down only 3.5%. We start seeing all the homes in his price range (under the local area $271,000 max), only to find that a great many of the homes are short sales or bank-owned homes. The Tallahassee homes are being sold in an "as is" state with no repairs being made.
Purchasing a house in Tallahassee that needs repair is a real catch-22 situation. The bank won't lend the money to buy the house until the repairs are complete (especially the roof - that darn, old roof - be sure you have at least 5 years of life expectancy to get good insurance). But with most "as is" short sales & foreclosures, repairs can't be done until the house has been purchased.
The solution may be HUD's 203(k) program. This type of loan may allow you to purchase or refinance a home and include the costs of making repairs and improvements. Note: this is only for buyers who are going to occupy the home as their primary residence.
Other restrictions apply: there is a $5000 minimum on repairs, and a $15,000 maximum. And, there are other ratios and criteria that must be met. These are best determined and explained by your trusted lender.
Be sure to make any offer you write contingent upon home inspections and wood rot/termite inspections. Also make sure you note in the offer that you are getting an FHA 203(k) loan and that the contract is contingent upon this specific loan approval.
There is a possible solution out there to help those Tallahassee first-time homebuyers AND address the vast supply of fixer-upper foreclosure and short sale homes on the market! For more information on FHA fixer-upper loans and a complete list of criteria, please email me at Lisa@CareyCottage.com or call your local Tallahassee lender.