My wife and found a house that was $200,000 which is way below the market value in that area. The house needs some work like carpet/flooring, sliding glass door is broke and broke down appliance and lots of painting. we have been pre-approved for fha. I was wondering if we could ask offer 210k and ask for 10k back at closing for repairs. Keep on in mind it is a bank owed property
Your bank of the FHA may not permit this. You will have to ask your agent and your lender about this. If the property is such a good deal, then it may appraise a bit higher than the sales price and some banks will set you up a home equity loan or HELOC based on the appraisal amount. If not, then just put time and work into the property slowly.
I think the bank would tell you to take a run. They would reason that if was worth $210K to you then it would be to someone else. Property prices are falling so be careful.
Typically a bank will loan 80% of the apraised value of the property. Banks often loan more than the sell price if the property needs improvments and the sell price is lower than 80% of apraised value. Talk to your banker to get details on what they will loan.
not unless the wll leave you with some equity in the house..you are paying less than the house is appraised for and your bank agrees….
You cannot receive cash at closing, the bank won’t allow it.
You are limited to get a refund UP TO your earnest money if part of it was not used…but that is money you had before, not “new money”.
You need to look for another loan after closing, but you are unlikely to get it if you are doing a 97% LTV.
Three options:
1. You can talk to a local bank about a construction loan. Figure out how much money you might need for all the repairs, then you get the loan for the full amount. When you close, the bank pays the seller for the house and the remainder stays “on loan” and you take draws as you need them to do the repairs. During the term of the construction loan, you pay interest only, normally at a higher interest rate, until the work is done. Then you get the home appraised again and convert from the construction loan to a conventional mortgage. Normally if you keep the mortgage with the same bank as the construction loan, you pay a conversion fee, but you don’t pay double closing costs.
2. There are FHA loans that will allow you to do the same – that is get the mortgage for the higher amount, draw on it to do the repairs, etc. A good loan officer that knows their way around FHA programs should be able to help you with that.
3. If the home appraises for much higher than you are paying for it, buy it, then take out an equity line of credit. Only borrow what you need to make the repairs. Pay it off ASAP because usually, your interest rate on the equity line of credit is higher than your mortgage.
NO!!! if its asking price is below market value, it because of the condition and the appraiser will deduct the condition and do a cost to cure and that will bring the appraisal down to the asking price. Also now days the home must be in average condition to get a loan.