All Forum Posts by: Michael Dunn

Hi Frank,

I appreciate yours , Wayne and Joshua's replies

Just wanted to mention and ask a few things please....

1. I read the following statement ....

 " There are several different types of properties that qualify for FHA financing. The building may be a detached residence, a semi-detached residence, a multiplex, a row house, or an individual condo unit. "

The property I am trying to purchase, has already ran into an issue , with it being an " attached " ( by roof line only )  BUT de-thatched from the main house type property

And from the above statement , it seems that this property should qualify for an FHA loan .... but I have been told that it won't , since there are no other " Similar " properties in the area to compare it to for an appraisal  ?

2. My Lender is going to base the house passing Inspection , based on the guidelines that the FHA uses.

But it will NOT be an FHA loan that I use, but a 5% down payment conventional loan.

Given this .....  Do you think that the Bank/ my Lender will likely allow my dad and I to do a majority of the work , given both of our experience in remodeling and repairs ? ( he's been doing it for over 30 years, and I've been doing it for over 12 years )

And if they allow us to do the majority of the work .... would they give us  4 - 6 months to complete all of the mandatory repairs ( AFTER closing ) ?

3. Since the AC is not working on this property, and the fact too, that a new one will cost around $3,000 - $3,500 , and I am needing to save every penny that I can ( as I will likely only have $10,000 available to complete any and all of the work that the Inspector says HAS TO be done to meet the FHA guidelines ( a new roof is possible too ... a $5,000 repair right there ).

So will they let you put in window units for Air Conditioning ?

Thanks again for everyone's input and help

This week is crunch time , and I'll likely have an Inspector come out by the end of the week..... just want to have a sense of what I can expect to happen beforehand

Thanks so much - Michael

Hi Joshua,

I really appreciate your reply

Here's a bit more about this property , and the way in which my Lender told me that this can even work ....

The property will NOT go FHA , and therefore I was told, my only other option is to do a Conventional Loan with me paying 5% down. I was told that they adhere to the guidelines for a property meeting " Liveable " standards / requirements via the FHA's guidelines.

The property is a distressed property , and needs things like new flooring, water heater, appliances, painted inside and out , etc.

The AC unit needs replaced too, but I'm not sure if I could get by with Not replacing it, and putting window units in it instead ?

I'm not to sure myself, as to how the money left over ( the roughly $5,000 ) will be " given " to me , to use it for the repairs ...... escrow account I guess ?

Since this is Not an FHA loan , do you think the Lender will let my dad and myself do most of the work, given are experience in remodeling and repairing houses.... even though neither one of us are insured or licensed ?

Is there a " Do-It Yourself " policy out there, that lets people who can show they have experience at doing certain repairs/projects, actually do the work themselves /

Thank you again for all of your time and your help,

I very much appreciate it - Michael

I just got a message from my Lender , and found out that I qualify for a maximum loan amount of $60,000

I will be going the Conventional Loan amount of 5% down , with the standards for the house " mandatory " repairs adhering to the FHA guidelines

So what I am wondering is ..... This property " needs " a decent amount of work done to it . The thing is , this property is in a Trust , and there is a total of $52,000 that HAS TO be paid out ..... 1. The payoff of the house is $29,000  2. Three people associated with the house get a total of $20,000    3. The Lawyer Fees are $4,000   4.  Closing Costs are $2,500  5. Appraisal cost of $500    

So that leaves a total of $55,000 for costs , with the Max loan amount of $60,000.  My down payment of 5% will be $3,000

This leaves $5,000 left over for repair costs, and by reading up on what the FHA guidelines are and what they require for a house to Pass and be approved for " liveable " condition, I will almost certainly need more than $5,000 to do all of the repairs .

Can someone shed some light please, as to how strict the FHA guidelines are , and what they will require , that Has to be done . Can I paint the inside and outside of the house, as I have been in the contracting business for 12 years ( but as of right now, I am NOT Licensed or Insured )

Just looking for some help and guidance, before I have to shell out $1,000 ( for the Inspection and Appraisal ), and knowing what I can expect to have to have fixed, and by knowing this , I can see how much more over the $5,000 I will likely need .

Thanks so much - Michael

Thank you Jon and Craig for your responses,

The deal with this property is that ..... I won't be able to get an FHA loan, due to the circumstances involving this property having " 2-units " , and there not being any other 2-unit or similar properties in the area to compare it to for comparable sales

So the Lender I am working with, said that my best ad ( only ) bet, is to go with the 5% down conventional loan

I just received in the mail yesterday , my credit score report, and the medium score of the 3 , is a 670

As to having the sell pay for the down payment, I just wasn't sure If my mom ( who is the Trustee of this property ), could pay for the 5% down payment ( Out of the Trust ) ?

I ask this because, I could use that extra $2,750 right now vs having to pay it in out of my own pocket for the down payment ( this assumes that the property will be sold to me, at a price of  $55,000 

Thank you again for the help - Michael

Good Afternoon, Just a few questions I have please.....

1. I just got  my credit score report in the mail , and my mid score is a 669 ( round it to 670 ).

Is this a high enough score, to qualify for the 5% down payment conventional loan ?

And with the lower the score ..... the higher your interest rate will be correct ?

2. I have read, that you can get the cost for the down payment ( 5% down in my case ) , " payed for "  / rolled into the loan from a family member , as a Gift ?

Would this work, even if the person selling me the house is a family member ?

Thanks for the help,

really appreciate it

I had a question regarding getting a FHA 203K rehab loan

the property I am wanting to purchase was built around 1945 ( there is no Lead Paint ) as far as I can tell

This is a distressed property , and needs around $20,000 - $25,000 in repairs done ( new roof, new A/C unit, painted inside and out, all new flooring, Bathroom remodeled some and the same with the kitchen, some electrical work )

The property is in a Trust , and my Mother is the Trustee of the property ( is was my grandmother's property )

The likely sell price will be about $55,000 - $60,000 ( this includes the pay off of the property, the repair costs, closing and the pre-paids )
The pay off for the property is $29,000

The ARV ( from the research I have done, should put the property in the $85,000 - $90,000 range ) after it's fixed up

I already have a licensed and bonded Contractor, lined up to do the work ( they have worked on and know all of the guidelines for FHA 203K loaned properties )

There is one thing I am a bit concerned about, and that is.... The property has 2 bedrooms and 1 bath in the " Main " part of the house and then it has a 2nd-unit ( which use to be a workshop , before someone turned it into a liveable type unit, with a kitchen, 1 bedroom and 1 bathroom )
This is connected to the Main house via the roofline ONLY..... there is about 20 ft. walking distance between the two ..... the Main house and the workshop ( 2nd-unit )
I called the Local Tax Assessor , to confirm that is it still considered on record and via court house documents as a single family residence , with a workshop / liveable space , and they confirmed that it is

Back in 2006 we had the property appraised, and this is exactly how the appraiser appraised it ..... as a single family residence with an attached workshop / liveable space

Well, I had an appraiser come out 4 weeks ago, and they said it was a 2-unit property and that they could NOT do an appraisal on it, because there are no other comparable properties in the area to compare it to ( other 2 unit properties )

I am in need of a Lender who can make sure and get an appraiser who will view/ look at and appraise the property as they did back in 2006 ..... as a single family with an attached workshop/liveable space

I have heard that with an FHA loan, that there are the following forms , for a property such as the one I am trying to purchase.... Single Family 1004 form
and the Multi-Family 1025 form
that can be used, no matter the property and or if there are no properties like it to run comparables against

I just don't want to pay for another appraisal , and not know beforehand ( 100% ) sure that it can for sure be appraised, and have a value put on it

Sorry for the long message, just wanted to let you know all of the facts
 
Thanks so much for your time and help,
I really appreciate it

I have a question please, regarding an appraiser being able to go across stateliness, to find properties to run comparable sells against the property I am trying to purchase

the property I am trying to purchase is in Mississippi ( right near the TN state line )

Well, it's being deemed as a 2-unit multi-property by the most recent appraiser

He said that there are no other properties in the area for him to run comparables against, since no other similar/ 2-unit properties are anywhere in the area

Can't he find properties in Memphis,TN ( that is just 30 minutes away ) to run comparable sales against?

There are plenty of 2-unit and duplexes and multi-family properties in Memphis,TN that he could then use

And Lastly, even if he won't/can't use sold properties in another state to run comparables against.... couldn't he just use Three.... 3 bed and 2 bath properties and then deduct / add X amount of dollars to the Property that I'm trying to get ?

Thanks for all of the help, very much appreciate it  

So I'm still in a bit of limbo in getting the deal closed on this property

A quick re-cap ..... it is a single family property with a de-thatched workshop ( connecting by the roofline only

The appraisal that was done back in 2006 , wrote it down as just that .....

A workshop ( currently used as a living area ) ..... det'd Living Area / Workshop

It is also written down in the 2006 appraisal as.... " One with accessory unit "

But the appraiser that I just had come out to do an appraisal on it , is saying that it is a ..... 2 unit property AND .... that because of this, he can't find any comparables ( since there are no 2 unit properties ) anywhere in the area

So this got me wondering if they could write it down / log it in , using either a  single family ( 1004 ) appraisal form  or  if they just won't come off of it as being a 2-unit, then they could use a  multi-family ( 1025 ) appraisal form ?

I'm in a time crunch right now, to get this property purchased, and all that is holding me up is the appraiser claiming that it's a 2-unit, and because of this, there are no comparables around the area to compare it to

What if I included in the renovations, the scope of work needed , to make this property conform to a single family unit with accessory unit use ?

A single family with accessory unit appraisal , is reported as/on a " Single Family ( 1004 ) appraisal form " ?

I was told that an accessory unit, defined by FHA/HUD is a separate additional living unit.... including separate kitchen, sleeping and bathroom facilities... attached or detached from the primary residential unit , on a single family lot.

And that the accessory unit must be subordinate in size and appearance to the primary unit and muse be connected to the utilities ( except phone and cable ) of the primary unit.

If all I need to do is to remove the additional electrical meter to make it conform, then I'll just add this cost to the repair costs

Thank you to any and all who wish to comment and give me some advice as on what to do

I appreciate it greatly - Michael

Hi Jon,

I am looking to purchase this property

Are Bank Loans more lenient , as to the guidelins that a property has to meet ( in comparing it to say an FHA loan )?

If I try for a bank loan , and can get this property ( purchase price ) for around 70% " under " it's ARV , hopefully this will be an incentive enough , for the Bank to do a Bank Loan.... perhaps ?

This way they'll know there's plenty of equity already built into the property ( once it's fixed up and the repairs are made ) ..... Plus, the bank would be lending to me at around a 70% LTV ..... which seems would be a positive for them ( even though I wouldn't be putting down, a 30% down payment )

On a typical bank loan, what is the required down payment ( percentage ) wise ?

And how are the repairs factored in with a bank loan , vs say an FHA 203K ? Do they also , just set the money aside for the repairs in Escrow ?

Thanks so much for all of the help - Michael

Good Morning,

I was doing some reading last night on various ways to get financing for properties ,a nd I came across a comparison of Getting a bank Loan vs a Mortgage

It seems that a Bank Loan is the preferred method for Lenders ?

Would the credit score / DTI be more lenient with a Bank Loan vs a Mortgage , sine a Mortgage is also FHA, VA, USDA loan , of which these three all have stricter guidelines

I am calling my Lender today to discuss getting a Bank loan on this property I have been pursuing, and was just trying to get as much information before I call them as possible .

And lastly.... This property is in a Trust , and also from what I read , this too can be a benefit to the borrower, as the likelihood of getting this property is greater ?

Thanks so much - Michael