mortgage plus reno all in one mortgage?

Question

I am looking at a property that I will probably bid 75k on.  It needs about 30k in renovations, and the property should be worth 150k arv.  My question is about the mortgage, can I have all of the reno costs in the mortgage? should I apply for a reno loan separate?  Its a foreclosed property, I have good credit and minimal debt.  What is the best way to approach this so that if/when I sign the contract I will have the monehy available for contractors etc.  Thanks.

Justen Ashcraft · Answer

that's good to hear.  From my reading the 203k is not for investment properties.  On the other hand the homestyle loan is.  Just depends on the down payment.  Which may be an issue.

Bryan H. · Answer

Wells Fargo provides the Homestyle loan, I was just looking over my documentation they sent me. There is a lot of paperwork and hoops to jump through. But if you are flipping a property and you brought it right, then you should have no problem with the program. It's much cheaper than a HML but it takes time.

Justen Ashcraft · Answer

thanks guys.  I am prequalified through wells fargo, and the foreclosed property I am looking at is actually through them as well.  I don't know if that will make a difference or not.  I assume it should help.  I am also prequalified for about 4x mor than I will be paying for the property.

Shawn Yesner · Answer

Have you looked into a 203(k) loan?  It is an FHA product that is designed to be used to make improvements to the house.  Unsure if a 203(k) is applicable for investment property - likely not since FHA is typically owner-occupied only.  If the 203(k) route won't work, then you can try a second mortgage line of credit, or go the private money / hard money route.  Typically, traditional lenders will not give you a cash-out loan on the purchase of property.

Bryan H. · Answer

Depending on your intentions to live in the home, you have a couple options.

If you plan on living in it. You can get a 203k.

If the property will be an investment, you will need to get a Homestyle loan.
https://www.fanniemae.com/content/fact_sheet/homestyle-renovation-factsheet.pdf

Find a lender that provides these loans, many do, get pre-approved and make some offers.

Nicholas Stevens · Answer

Hi Justen - A 203k loan allows you to do just that, but not sure about it being a foreclosed property.  Find a local mortgage broker that specializes in 203k loans as they are a specialized type of loan and you want to make sure you get the right information.