FHA Loan won't cover due to outdated wiring
I got pre approved for an FHA loan and found a 4 unit building in my price range that I would like to house-hack living in one unit and renting out the other three, however due to old wiring that would need replaced my FHA loan will not work for the loan. I could go traditional loan and fund the repairs myself but it would eat into what funds I have for other much needed repairs. Has anyone ever worked with an appraiser to setup a deal to have the owner cover the cost of the repairs and then pay them the difference through my mortgage?
Not sure if this is possible. Thank you
I think FHA has a program for repair money since you're going to live in it.
@Alexander Bowman
Have you looked into FHA203K?
Hi Alexander -
Look into an FHA Rehab (203K loan). Essentially, you can fund the loan with repairs still to be completed, and an FHA approved contractor has up to 6 months to complete the renovations outlined in the appraisal. The amount of money you'll have at your disposal will depend on the appraisal.
Just a general question.
Has anyone had any closing problems with 203K loans on 2,3,4 plexes (???)
Such as taking a longer time to close than anticipated, or other.
Or have you found the loan process to be smooth as glass and on time, with no last minute hangups or surprises.
I have been doing some research into the 203k loan. Just a lot of red tape and checkboxes to check off to get it, so it's taking a bit of time. Thank you all for your input.
You need licensed contractor. Contractor bids the repairs to bring to current code. Needs to be under $35000 in general.
What is year built? What else is wrong with it? Who is your lender? Is seller going to extend you need time to get this together? Didn't your agent know this property wasn't a match for the loan?
Send me the appraisal I can give you some ideas
@Alexander Bowman. Talk to your lender about an escrow hold back of seller funds. See if they will let that fly. Otherwise, look into a FHA 203k loan.
@Caroline Gerardo Hi Is there a govt database of contractors w experience with 203K? Would I add extension clause for any delays?
Thank you everyone for your replies. The property sold in the time I was doing research but I learned some useful information I can use later in my real estate investing career!
@Khari F. No there is no database of approved contractors. There is, however a black list of contractors disallowed but it is NOT public.
Not every lender can do 203k- the "desk" has to be an approved person as there are follow ups on the release of funds as work is completed. It is a fabulous tool. On day two of the contract, your licensed contractor itemizes all the costs and lender reviews to make sure they numbers are in line. Checks are issued after closing like a construction loan from an escrow account as work is completed. Since the total amount is not the same as building a whole new house in dollars, not all contractors will want to do them- is considered small and accounting paperwork that a single contractor is not fond of processing. Finding local person who is licensed and the job fits his/her schedule is important.
<the> not "they" spell check