FHA/HUD 203(k) mortgage/rehab loans?

Discussion in 'Homesteading Questions' started by hisenthlay, Jul 20, 2006.

  1. hisenthlay

    hisenthlay a.k.a. hyzenthlay

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    If you know what that title means, then maybe you can help me. :) Have any of you ever gotten one of these rehabilitation/home purchase loans? Was it a good experience? A lot of red tape? A lot of government folks looking over your shoulder to see how the rehab was going? High interest rates/points? Is there a max amount they will loan you?

    I'm still trying to figure out how to finance this property I keep talking about. I can't get a regular residential loan, because the house is currently uninhabitable and maybe structurally unsound. I can't get a land loan unless I demolish all the buildings on it before closing. I can't get a construction loan unless I already have a contractor and building plans and all of that, which I don't want to deal with right now. I can't get a home equity loan, because I don't own another house already.

    I just found out about these 203(k) renovation loans, and it may be just what I need, as long as the sale could close before this guy loses his house to the bank (he's already behind on his mortgage payments, and he doesn't have the money to pay). I'm going to make some calls to lenders on this tomorrow AM, but I was hoping to hear first-hand personal accounts about it, if there are any.

    Ugh, why can't anything be simple...? :shrug:

    Thanks!
     
  2. marvella

    marvella Well-Known Member

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    if this was me, i'd forget about getting this house. there are too many roadblocks. to me, it is the universes' way saying "no."
     

  3. hisenthlay

    hisenthlay a.k.a. hyzenthlay

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    Trust me, that's my next step. If only it didn't seem like such a good price, and if only we hadn't fallen in love with the place....
     
  4. Beltane

    Beltane Enjoying Four Seasons

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    DH and I decided not to utilize a rehab loan because there was quite a bit of 'do this, don't do that' type of thing. For example, much of the rehab DH and I wanted to complete could have been done by us, but with the rehab loan you had to have a licensed contractor DO EVERYTHING. They also mandate a certain deadline that rehab (or parts of it) have to be completed by.

    Definately ask questions...but if you're like 75% of the folks on this site, you probably won't be happy. Good luck.
     
  5. ellebeaux

    ellebeaux Well-Known Member

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    Hisenthlay,

    If it's any help to you, I too fell in love with a run down house on a piece of property and looked into the 203k loan to rehab it. It turned out to be such a headache and the quote I got for fixing the house to bring it up to code was $100,000! So I let go of the idea.

    A few weeks later, I found my perfect home, freshly painted and ready to move into. And cheaper!

    So good luck in whatever you decide,

    Beaux
     
  6. RedHairedBonnie

    RedHairedBonnie Well-Known Member

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    We got a HUD rehab loan a number of years ago, when the city changed codes laws, and our 100+ house didn't meet the new standards, and the cost to bring it up to code was to great for us to meet ourselves. Yes, it took some time, and yes some work we could do had to be contracted out, yes there was paperwork. But we got to keep our house, got it up to code, and after the work was done, we had inspectors to verify it came to code and never saw them again. We also got to choose what we wanted done, and didn't have to take the lowest bidder. The deal for us was, we had to come up with 25% of the total cost, of the remaining 75% we payed back 50% of it over 5 years-interest free, and at the 11 year point the other 50% was "forgiven" We did it through the town hall, and it was a postive experience for us. I don't know if you can purchase using HUD or if the rules have changed. But for us it worked and worked well. I'd see about getting one if this is the place you want. Good Luck
    Bonnie
     
  7. LvDemWings

    LvDemWings Well-Known Member

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    Check to see if the current homeowners mortgage is assumable. It can't hurt to check it out. If you and the seller can sit down and call his mortgage company together you might just get lucky. Common sense says that its more practical to have someone making payments (and the mortgage holder earning interest) than it being tied up in court and on the repo lists for an undetermined amount of time.
     
  8. hisenthlay

    hisenthlay a.k.a. hyzenthlay

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    Thanks for the great info, guys! Ellebeaux, I think that my experience with this place and HUD would be about the same as yours. If I already owned it and just wanted to rehab it like Bonnie, maybe that would be different. LvDemWings, that's a great suggestion, but unfortunately I already looked into that and his mortgages are NOT assumable. The mortgage companies' loss, IMO, because I'm a much better risk than he is, but oh well.

    Here's the good news--by searching the HT archives, I came across a recommendation for a mortgage company called Farm Credit Services that will do out of the ordinary things. I called them, and they said that it should be no problem! Their interest rate is a couple points higher than a residential mortgage, and they require a little more down, but we can negotiate with the seller to try to make up for some of that. We're going to put in an offer tonight, and see what happens! Thank God for HT!!! You guys are really the best! Even if this doesn't end up working out in the end, I'll know that I really gave it a good shot, better than I could've without the help of this forum.

    h
     
  9. hisenthlay

    hisenthlay a.k.a. hyzenthlay

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    Update: We didn't get the property. We showed up yesterday to put in our offer, and the seller had apparently just signed a contract with the neighbor. The neighbor had apparently intimidated the old guy into taking less for the place by telling him that we weren't serious buyers, and that his house was going to get condemned or foreclosed on and he was going to get put in a home if he didn't sign with the neighbor (which wasn't true--our closing would've been fast enough to prevent either one of those things, and the old guy would've gotten what he wanted for the place, been able to buy an easier maintenance house on the busline, and live on the proceeds for the rest of his life).

    So maybe marvella was right--seems like the universe was against us from the beginning on this one....