thouse Posted August 19, 2009 Share Posted August 19, 2009 Not sure where to put this, but I figured here would be close because I am talking about money. I am in the process of buying a home and I have a question. Say I was approved for 150,000 but found a home for 100,000. Could I still mortgage the full 150,000 and use the 50,000 to do repairs to the home. Also does anyone know the qualifications to qualify for a 203k streamline loan? Link to comment
Dubb Posted August 19, 2009 Share Posted August 19, 2009 It depends what the bank approves you for. You would have to an application with the bank to see the highest amount they are willing to lend you. Link to comment
ComputerGuy Posted August 19, 2009 Share Posted August 19, 2009 Im not sure how it works in the US but over here, thats how it works. Basically you get your approval amount, then when you buy a property you can either get just the amount you need or you can get right up to the limit of your approval. You DON'T pay money on left over amounts - for example, if you get 200k and you buy a 150k place, you only pay mortgage on the 150k the house cost you. You don't pay interest/repayments on the left over 50k unless you spend it. So say you spent another 30k doing the house up after a year, you'd just add that 30k onto the remaining mortgage and your payments would go up to cover that extra by the end of the mortgage. Link to comment
thouse Posted August 19, 2009 Author Share Posted August 19, 2009 Im not sure how it works in the US but over here, thats how it works. Basically you get your approval amount, then when you buy a property you can either get just the amount you need or you can get right up to the limit of your approval. You DON'T pay money on left over amounts - for example, if you get 200k and you buy a 150k place, you only pay mortgage on the 150k the house cost you. You don't pay interest/repayments on the left over 50k unless you spend it. So say you spent another 30k doing the house up after a year, you'd just add that 30k onto the remaining mortgage and your payments would go up to cover that extra by the end of the mortgage. See this what I am hoping. To buy a house well below what I am approved and use the leftover to fix the house up the way I want. Link to comment
ComputerGuy Posted August 19, 2009 Share Posted August 19, 2009 You are always better off taking the maximum you are approved for as you don't get charged for it unless you spend it and you can use it later on to do up the house, buy a car, alternative to a credit card. It also has the extra advantage that because its bundled with a homeloan over 20 to 30 years, the repayments are lower. Say you wanted a $10k car, a car loan is $10k over say 5 years at 8% variable interest. A home loan is generally a lot lower at say 4 to 5% interest at the moment. If you still pay it off over 5 years then you save on interest. Alternatively you can bundle it in with the rest of the mortgage and pay it off over the next 20 or 30 years and only pay an extra maybe $5 a week so you don't have a huge financial impact and you also don't have to deal with huge interest rates and penaltys should you not be able to pay the $150 car loan payment one week. Just make sure you get a loan with free redraw to make all the above easier. Link to comment
FortunateOne Posted August 19, 2009 Share Posted August 19, 2009 I'm a banker in the US and I can tell you with 100% certainty that no bank will lend more then the appraised value of the home. The FHA 203k rehab program is not a remodeling loan, but extra cash loan to bring a FHA insured home up to livable standards: The only way to intoduce you to residential real estate finance is to read this thread I wrote a while back: Link to comment
BellaDonna Posted August 19, 2009 Share Posted August 19, 2009 Say I was approved for 150,000 but found a home for 100,000. Could I still mortgage the full 150,000 and use the 50,000 to do repairs to the home. I don't think so. What you could do is mortgage the home for $100,000 and if you need to do repairs, take out a home equity loan later, through your personal bank. You can claim the interest you pay on a home equity loan on your tax return too. Link to comment
FortunateOne Posted August 19, 2009 Share Posted August 19, 2009 I don't think so. What you could do is mortgage the home for $100,000 and if you need to do repairs, take out a home equity loan later, through your personal bank. You can claim the interest you pay on a home equity loan on your tax return too. The way the credit wholesale markets are at this time there will not be any HELOC's available unless you have built in equity, and then the lenders will only loan up to a combined 80% of the appraused value if the home. Another point is that if there are any improvements that the appraiser observes then the bank will deny the loan until the seller fixes the house. Link to comment
shikashika Posted August 19, 2009 Share Posted August 19, 2009 I'm just fascinated to find out where you can buy a home as cheap as ( or even rundown apartment) $150 000!! Link to comment
BellaDonna Posted August 19, 2009 Share Posted August 19, 2009 The way the credit wholesale markets are at this time there will not be any HELOC's available unless you have built in equity, and then the lenders will only loan up to a combined 80% of the appraused value if the home. Another point is that if there are any improvements that the appraiser observes then the bank will deny the loan until the seller fixes the house. If the house is a steal, as in a short sale or a forclosure- sold way below value, and it passes inspection- and these renovations are cosmetic and not structural/required- can't the OP still take out a home equity loan? Link to comment
FortunateOne Posted August 19, 2009 Share Posted August 19, 2009 If the house is a steal, as in a short sale or a forclosure- sold way below value, and it passes inspection- and these renovations are cosmetic and not structural/required- can't the OP still take out a home equity loan? No, the shortsale transaction price becomes a new public record comparable for the neighborhood; therfore, a newly lowered market value for all homes that meet the same comparable size drop down to the newly sold shortsale value/price. Link to comment
BellaDonna Posted August 19, 2009 Share Posted August 19, 2009 Ah, makes sense. Thanks for clarifying. Link to comment
ComputerGuy Posted August 20, 2009 Share Posted August 20, 2009 I don't think so. What you could do is mortgage the home for $100,000 and if you need to do repairs, take out a home equity loan later, through your personal bank. You can claim the interest you pay on a home equity loan on your tax return too. I got a home loan in March and did just that, you dont get it in cash afterwards, but because you are pre-approved for more, you can take the bigger amount and redraw on it past the limit of the base homeloan. I've already done this to remodel the bathroom - house cost me $154k, pre approved for $175k and after everything setlled down I redrew another $5k to pay for the bathroom. Edit: This is in Australia though, not the US so it could be different. Link to comment
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