Financing question - please assist
Good day everyone,
I've found myself in a goofy situation. I've found an REO property in Virginia that I wish to purchase as my primary residence, if I can get the right price. It is well within my range of affordability (asking price is around $140k), but it is a fixer-upper. My credit is good (above 700) and I have over $10,000 in savings. I earn a good salary.
There is a broken window and there are holes in several areas of the drywall, plus a few other minor problems. I wish to knock down 5 walls and replace all of the windows anyway. I'm handy, I work for an architectural products manufacturer (I even get free paint), and my dad was once a carpenter, so I'm confident that we can slay this dragon since there are no major issues with this "as is" property aside from primarily cosmetic issues. I will be replacing carpet with laminate, redoing the kitchen, painting etc.
However, it seems that I may have MAJOR problems getting a loan for THIS property. Apparently, getting a loan, FHA or traditional, is dependent upon an inspection of the property. According to lenders I have spoken with, holes in drywall and broken windows are deal breakers (I can't get a loan because of these issues).
A 203k FHA rehab loan was recommended by a lender, but that would mean that the work would have to be done by a licensed contractor, which doesn't exactly sweeten the deal since I want to do the work myself and I don't want to pay someone else to do it.
I have heard of two possible solutions. First, I can pay a contractor to use their license to do the work myself.
The second option would be to have my parents buy the property with cash. Following the purchase, my father and I would repair all that needs to be repaired for the house to pass inspection. Finally, I would purchase the house from my parents for the same amount they paid for it, or a few bucks more. Since all the work would be done at this point, there shouldn't be an issue getting a loan. However, I just heard back from one lender who said that his company would never underwrite such a purchase.
So at this point, I am just trying to figure out how to buy the darn thing. If you have ANY informed suggestions, I would GREATLY appreciate them.
Thanks!
Burns
Burns,
You may be able to get repair estimates and them put the money in escrow at closing so the lender knows that the money is in place to get the work done.