FHA 203k Rehab Loan

[Thirteen]

We found a place: roof is old. No underwriter will fund a purchase on a roof that old, and no insurance company will insure it, either.

Should we: get roof estimate (full replacement), and present offer to buyer, sale contingent on complete replacement?

OR

Apply for this type of loan, which would allow us to write the cost into the loan, and therefore ask for a lower price on sale of house?

We will still have home inspection done, but it's very obvious that the roof has to be done (26 yrs old!)




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[Mrs. MD, Esq.]

I would do the first...their realtor (if they have one) knows most buyers will need the roof replaced prior to buying.

[Thirteen]

I would do the first...their realtor (if they have one) knows most buyers will need the roof replaced prior to buying.

This was my thought as well, but I didn't want to be a jerk about it.
Additionally, all buildings (barn & outdoor kitchen) must have roof inspected so insurance company will sign off on insuring the property.
I expect the barn to need a roof replacement (same age as house), so I'd guess the homeowner is looking at 15-30k, depending on materials/damage to fix it.
Not sure if people have that kind of money in reserve...


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[Vanquisher]

Yay!! Hope it's perfect!!

[OrionGrad]

I'd go with option 1, too.
We did something similar with our offer, although we were dealing with a sewer line that cost them about 8k to fix. Having them fix it relieves you of the headaches of dealing with roofers/contractors if additional issues come up during the repair.

[BonBon]

Is this the place with the land?

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[Thirteen]

Is this the place with the land?

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Yes.


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[Deebs]

I don't know what option I'd take. Have you ever worked with a rehab loan? DH and I financed our investment property with one. It's very different from what we're used to. The bank had to have access to the contractor's credit report and the funds go directly to him. It's fine, but did limit us in some ways.


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[Thirteen]

I don't know what option I'd take. Have you ever worked with a rehab loan? DH and I financed our investment property with one. It's very different from what we're used to. The bank had to have access to the contractor's credit report and the funds go directly to him. It's fine, but did limit us in some ways.


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I haven't, actually. Could you tell me more about the application process, and your experience?


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[Deebs]

Two banks we talked to wanted 30% down, though I don't remember if that was because it was a rehab or an investment property (we just closed 8 weeks ago, but we found a bank happy with 20% so that info left my brain). We had to have three contractors come in and bid the job. The maximum we could do in rehab was $30K, and then they made us take out an additional 10% as a contingency, so it ended up being $33K in addition to the mortgage. The contractors had to submit to a credit check. Once the work is complete, the bank comes to do an inspection and pays the contractor. Anything on our "punch list" in the original estimate must be complete or the contractor doesn't get paid. We had two contractors who wouldn't bid (don't know I'd they knew they'd have a credit issue though). Our contractor hasn't don't this before and is frustrated with the process. If it were just for a roof, it would probably be simpler.


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[SoonerTexan]

The landlord on the duplex we rented when we first got married did this--he didn't speak highly of the whole situation. He was redoing an entire 1930s home though

[Thirteen]

FHA 203k Rehab Loan

It looks like we can do this another way: we could make an offer, and then, if the seller claims to not have the cash, monies would go into an escrow account to be taken out of her overall profit to fund the roof replacement.

This sounds like less of a hassle than a rehab loan, but I'm still not sure how she will feel about it.


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[Thirteen]

Moar kwesteeunz!!!!

1) None of the carpeting in the bedrooms matches. We're talking green, blue, and beige.
Can we work that into the offer to be replaced at cost to seller, or that stupid?

2) Wallpaper in two bathrooms and kitchen. I can leave the kitchen one for a while, it doesn't hurt my eyes.
Should we pay a professional to go in and strip all of it at once?




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[MrsSz]

1) None of the carpeting in the bedrooms matches. We're talking green, blue, and beige.
Can we work that into the offer to be replaced at cost to seller, or that stupid?


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Totally not uncalled for. I write it in offers all the time. You're better off getting a credit back than having it replaced before closing

[Thirteen]

Totally not uncalled for. I write it in offers all the time. You're better off getting a credit back than having it replaced before closing

What does that look like in an offer, and how should I have our agent word it, so that it isn't offensive?

Thank you!!!!


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