Loan Advice

JRR · Joined: 10 Aug 2005 Posts: 2

I am looking to purchase a house in Dallas. The house needs foundation work. The house is going for 75k, bid for foundation repair is 13k. It is located in a rapidly developing area and would be a decent investment. I have never purchased a home and need advice on where/what type of loan to apply for.
I would like to go no money down, possibly interest only. I would also like to include the 13k in foundation repair in the loan. My credit is right at 600. I have no derogatory credit. I have stable work history, make 55k per year.
Anybody have any suggestions?
Thanks

chow · Posted: Wed Aug 10, 2005 10:37 pm Post subject:

If your score is 600, and no degrogs, why only 600 for a score?

With a 600 score, I would suggest you find a LO that does FHA 203K's. There will be no 100% financing with your score-and Interest Only-on a home that needs structual repairs. If that animal does exist, please tell me about it. I love rehab loans! You will need at least 3% down, plus closing costs, plus fee's up front for the inspection and draw service. They normally get paid upfront, and have HUD approval. You need to kick in some funds and labor or funds. Please read about rehab loans here:

http://www.hud.gov/buying/index.cfm

read, this page and look at the area titled: "Rehab a Home" It's down near the botttom. Then interview a few LO's who do rehab loans. No lender or bank will let you buy a home with structual issues. But there is a way to finance some of the repairs.

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

I checked with my Renovation Specialist who does the 203k's and have yet to hear back from him. I'll let you know what he tells me about your scenario.

JRR · Joined: 10 Aug 2005 Posts: 2

Thanks for the replies.
My score is 602 because my few low limit credit cards are at 90% their limit ($4300), and not that long of a credit history (3 years)...so the credit report tells me. I plan to pay off the cards the first week of September which should raise my score...in a month or two. I talked with the seller, apparently he had an offer for 70k on the house. It sounds like I will have to wait until my scores are closer to 700.
Thanks again for the quick replies.

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

JRR here's the response from my renovation specialist.

Quote: It definately would be a renovation loan. I do loans all over the country-so TX would be fine. If his credit score is only 600, he has some derogs, but we could go FHA. Our streamline 203K would be the way to go as we are doing under $15,000 in repairs. He mentions buying as an investment. All above would be for an owner occupied. Non owner would be different, but with only a 600 score it would probably not work out.

So the important thing to note is that you said you h ave never purchased a home, but that it would be a good investment. My question is will you be living in the property? if you don't have derog credit then you're going to be in a good position especially if you pay off those credit cards. I know with normal FHA loans you can receive a 'gift' from the seller for your minimum investment that is required, this may be available on the 203k as well, I'm not sure on that. Chow? I'm assuming you know ;)

If you have further questions about this property send me a message and I can see about getting you in touch with my reno specialist.

chow · Posted: Thu Aug 11, 2005 10:03 pm Post subject:

paying down half on the credit limit's reported, but we need a little "Tigger Action" here.

some cards just report high balance, and some report full available credit? :wink:

With a 203K you need 3% down, and then can I walk Haplo though the rest of the maze? Basically, I will disclose that, since I'm going to anyway, and Haplo can learn a bit.

the 203K requires some funds paid up front. Basically, it is half or most of the Inspection service company, who is HUD approved, for that area. (Let's say $1200. it's in Dallas, and we know we have a WARPED foundation, and that is a issue.) You need to pay the appraisal and credit upfront. A 203k Appraisal is a little more expensive, because you are getting a "Before, and After" appraisal. HUD will allow you to borrow 110% of the AFTER improved amount. You will need to kick in a few dollars to fix this, or do it yourself-with the inspector looking over your back or have a contractor friend who's going to supervise you- to make that HUD approved inspector happy. That is going for $1800.00.

(you see, I was once a 203K borrower, and I like to see homes rehabbed in a correct manner. If you can do it on your own, please have a HUD approved inspector there to "Baby Sit" you. I had C.W. Schneph follow me around, and I have sent many home buyers in a 203K situation to him. I figure if he can have a news team like 20/20 follow his crew around- he's safe. I did pay him twice, and his crew did me well.)

***The Evile TWIN- in me says.... (U sure u wanna pay too much since the foundation is bad?)
There is no way to get 100% financing and I/O on a rehab.

chow · Posted: Thu Aug 11, 2005 10:16 pm Post subject:

Can I say HELLO?

"Our streamline 203K would be the way to go as we are doing under $15,000 in repairs."

Haplo, this isn't a "Steam line" this is a full purchase with repair money-UPFONT. :wink:

Now, go back to your UW, and tell them to go study 203K's as in "Purchase with Rehab" not a REFI.

A PURCHASE WITH REHAB ON 203K

How do you know what the repairs are going to be until inspection?

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

Hey whoa now, I quoted it for a reason :P That's what was stated to me. I imagine that his view of 'streamline' is that since it's under 15k there is less documentation needed, or something of that nature. I don't think he means an FHA streamline refinance.

Sheesh Chow, bustin mah balls like that :P Going to need to find that nuke button... lol

chow · Posted: Fri Aug 12, 2005 7:06 pm Post subject:

JRR, excuse me while I pick on my fellow moderator.....Haplo????? Don't threaten me with your nuke action, otherwise I will find your new interest, and tell her how much of a mortgage geek you are becoming!!! :lol:

If you get much more "geeky" I'm sending you a pocket protector for Christmas, with my commercial hard money company lenders name on it! It's called "Solutions" by Uncle Guido.....(i'm not lying-his company name is Solutions, and I nic named him "Uncle Guido." Plople just laugh when I tell him my name for him, and I have to, because I refer to him so often as that name, I don't want them getting confused.

JRR, are your credit cards reporting the full credit limit, or just the high balance? You need to remember that if you keep them below the 50% of the limit or the reported high balance, that will help your score. Paying them all off, with new credit may make you look too open to use all the credit. Having too much credit available can hurt you too. I would pay them down to half, or off-and then just use them-and pay off monthly. I only use my cards for a little thing here and there, or major purchases, then pay them off in a month or two. I'm not a big fan of those interest charges. :wink:

chow · Posted: Fri Aug 12, 2005 7:10 pm Post subject:

excuse my typing but this "one armed bandit action" on a keyboard can be a little hard.....I can hardly wait to attempt a rainbow vaccum and string mop with it! (maybe I should have made the Title Company rep who used my phone all morning run the sweeper for use of my unlimited phone line?) :roll: