Thursday, October 6, 2011
When the Kitchen's Missing - Financing Fixers and Foreclosures
"I couldn't believe the kitchen was completely torn out," said Kara Sanders. The house was perfect for her family otherwise. "It's was the location we'd wanted - but we couldn't get financing."
Bad roofs, missing fixtures, holes in walls, all typical for foreclosed properties. Even buyers willing to fix houses have a problem - getting financing to close, paying for improvements.
"We didn't have an extra $20,000 to pay for all the work."
FHA's 203K program provides one loan to finance the purchase and the improvements. Escrow can close even if the property's in bad condition.
Here's an example:
$ 180,000 sales price of home
$ 40,000 cost of work to be completed
$ 220,000 total amount that financing is based on
With this example, the buyer would put $7,700 and finance $212,300. The 40,000 held for improvements would be paid out as work was completed.
"By the time we were finished, our house was worth over $300,000," added Kara. "It's better than any house we could have afforded to buy."
What's your first step? Get pre-approved for FHA Financing. When you find a house, you'll have to get contractor estimates, then estimates from a HUD approved estimator. Be sure that the house will be worth what you're paying for it, plus the improvements.
Kara Sanders was amazed. "I didn't even know this program existed. Now I'm telling everyone about it!"
Article Source: http://EzineArticles.com/2775602
Posted by 203konline