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Another mortgage question

J

Jumpem

Lifer
The house I am looking at is not quite finished. It seems the builder ran out of money. It is vacant.

It's a 1900sq.ft. cedar-sided chalet on 8 acres. The inside is great. Hardwood floors, two story living room, upstairs loft, stine fireplace, expensive stainless steel appliances. Tile and wood kitchen. Here is what I noticed form looking around the outside of it:

The driveway is really rough. My gf's Forester was getting wheels in the air going up it. It will definitely need a bulldozer to make a few passes to level it out.

There is no landscaping whatsoever. several acres around the house would need to be leveled, stone removed, fill brought in and leveled. There are some dead trees around that need to be cut down, and the stumps removed.

The deck needs some work. It seems they were in a hurry to finish it and did a rush job. Boards are not lined up well and the railing wobbles.

Some exterior trim is not painted and it looks like a few boards were never put up on the bottom of the front roof overhang.

So It seems I would need to borrow $10k or so to finish it up and redo a couple exterior items. How does this work with a mortgage lender? Do they even offer this, or would I have to get a mortgage and then some type of home imporvement loan from a bank?

 
Originally posted by: HBalzer
Depends on if the house is worth more than you paid or if you have some other form of collateral.
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I don't really have any subatantial collateral at this point.

They are asking $200k for the house, which is too high. If the house was perfect, and landscaped I think it's in the $170-180 range. With the work it needs I am thinking of offering $160k or so.

If I like what I see on the inside up close I'll have an appraiser, inspector, and a couple of my own people go through it. then I'll see what's reasonable.
 
I'm not anywhere close to a professional on the matter, but you'd have to get an appraisal to come in quite a bit higher than what the selling price is.

Example: if the appraisal says "The place is worth $200,000". And the seller will let it go for $180,000, then you could maybe get the extra as a HELOC for fixing it up. But there's a lot of factors that come into play. Appraisal has to come in a lot better than the selling price, lender has to be willing to do it, ect.

I had a friend buy a home in Phoenix last year. The place was $205k. It didn't have a pool. The market down there was exploding. The appraisal for a similar home with a pool came in at $225,000. The mortgage company let my friend work a $20,000 construction loan for a pool into a HELOC when working up the mortgage.

You would be trying something similar.

Again, I'm not in the real estate field so I could be way off on how it really works. 🙂 I just know that people have done similar things.
 
Boost the price by $10k and have the sellers cut you a check. If the selling price is reasonable more than likely the appraiser will appraise the house at just slightly more than the selling price, whatever that price ends up being.
 
Originally posted by: HBalzer
You can always work in the deal. Say I'll pay such and such if you pay to get this fixed.
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My cousin does everything that would be needed, such as landscaping, heavy equipment, tree removal, and redoing parts of the main deck.

He wouldn't charge me an arm and a leg but we would have to rent a bulldozer, a tractor with a bush hog, and a stump grinder. I think we could get everything done for under $5k if we did it ourselves. I have no idea what a contractor would charge for everything.
 
Originally posted by: HBalzer
You can have them give you a $5k allowance for the landscaping
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The seller or the mortgage lender?

I would think this kind of situation arises fairly often and there's a standards way(s) they handle it.
 
The house sounds very inviting. Seems to me you should be able to buy an unfinished house at a very good price. Often the fact that it's unfinished means lenders are reluctant to give a mortgage at all, and buyers are much fewer.

If the house is finished enough to get a mortgage, avoid PMI if at all possible. Someone mentioned HELOC and that is less painful.

Find out what the finish work is worth retail so you know where you stand. It sounds like $20K to me. You can use your relatives help, but do not count on it where your home and a mortgage is involved. They have to make a living too and that sounds like several weeks work with a crew and equipment.


Jim
 
Originally posted by: Winchester
According to Fannie Mae, you can not borrow more than the house appraises for.
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There are programs out there > 100% ltv (not by much mind you). That said, you need to get the house appraised. An appraiser can get give you a ball park figure with the comp's around it...
 
Originally posted by: xgsound
The house sounds very inviting. Seems to me you should be able to buy an unfinished house at a very good price. Often the fact that it's unfinished means lenders are reluctant to give a mortgage at all, and buyers are much fewer.

If the house is finished enough to get a mortgage, avoid PMI if at all possible. Someone mentioned HELOC and that is less painful.

Find out what the finish work is worth retail so you know where you stand. It sounds like $20K to me. You can use your relatives help, but do not count on it where your home and a mortgage is involved. They have to make a living too and that sounds like several weeks work with a crew and equipment.


Jim
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The inside is excellnet, very nice. Just some rought edges on the outside of the house.. and then 8 acres of landscaping. 🙁

I called the selling realtor to get a tour of the inside and all. After that if I still like it I'll have it appraised and checked over.

 
I'd also seriously consider spending a couple hundred bucks out of pocket for a very detailed home inspector.

You really want to know if they cut corners in...less obvious...places. I had some friends that recently bought a house and they didn't have it inspected. A LOT of little things started popping up that they missed on the walkthroughts. The seller built the place himself and cut a lot of corners in the building process.

Counter tops weren't glued/fasted down. Lots of little corner pieces of trim and flooring were left unfinished. The wiring was done really poorly and none of the light switches worked as they should. There were some leaky areas in the basement. Door jams were out of whack and doors wouldn't close. Ect.

Get an inspector in there and make sure things are in proper order before getting really serious about it.
 
Ask yourself if you REALLY need to get the land graded. I mean, who cares if your lawn is lumpy and has hills? That PROBABLY something I'd not worry about if I had thousands in credit card debt and over $100k in overall debt. But that's just me.
 
Originally posted by: vi_edit
I'd also seriously consider spending a couple hundred bucks out of pocket for a very detailed home inspector.

You really want to know if they cut corners in...less obvious...places. I had some friends that recently bought a house and they didn't have it inspected. A LOT of little things started popping up that they missed on the walkthroughts. The seller built the place himself and cut a lot of corners in the building process.

Counter tops weren't glued/fasted down. Lots of little corner pieces of trim and flooring were left unfinished. The wiring was done really poorly and none of the light switches worked as they should. There were some leaky areas in the basement. Door jams were out of whack and doors wouldn't close. Ect.

Get an inspector in there and make sure things are in proper order before getting really serious about it.
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I am. 🙂

As I mentioned above, if I like the inside after I go through it I will have an appraiser and inspector go over the home before I make any decisions.
 
Originally posted by: mugs
Ask yourself if you REALLY need to get the land graded. I mean, who cares if your lawn is lumpy and has hills? That PROBABLY something I'd not worry about if I had thousands in credit card debt and over $100k in overall debt. But that's just me.
Click to expand...

It doesn't need to be. But I literally would have to mow down the jungle with a weedeater if it's not. It's also not just that it's hilly and unsmooth. It's hard dirt with stone packed into it. I doubt grass would even grow.

My cousin does this kind of work all the time, so it would probably only cost me a days rental on a dozer and owng hima favor.

the debts coming along good too. I've sold my car to save on the payments and insurance, and we've paid off some of her CCs already. We just finished school so we haven't had time to pay off the debt from getting our degrees yet. It will happen over time.
 
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