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I got pre approved 100k. I found a foreclosed home for 84k, could I put an offer on the table and the loan allow me to get approx. 5k to replace the carpet and other little things in the house? The house is sold AS IS so I can’t ask the bank for an allowance to fix up the house.

I was thinking on putting down an offer of 75k and the bank pay the closing costs. but i was told that they have several offers… so should i offer 78k and have them pay the closing costs?

What do you all think?
(this is taking place in SC)

6 Thoughts on Foreclosure home & FHA loan?
  1. Reply
    February 13, 2014 at 2:31 am

    They will not pay closing cost and as is is just that. So your answer is no but you can put in any offer you wish it will either be accepted or rejected as some one may pay asking price

  2. Reply
    February 13, 2014 at 3:08 am

    It’s good that you were pre approved (not “pre qualified,” right?) for $ 100,000. However, it will be the appraisal that dictates the bank terms, as it is the equity in the property that gives the bank collateral for the loan.

    Are you saying that the bank pre-approved you without requiring a set down payment, such as 20% down? Since this is a foreclosure property, is $ 84,000 the amount owed on the previous mortgage?

    If you are a bona fide purchaser, ask to see the other offers, as well as the appraisal. If the appraisal comes in higher than $ 84,000, and you have a stable, good paying job and good credit, find out from the same lender who will give you the mortgage, if you can take out a small equity line after closing for the repairs.

    I don’t think you can dictate terms on a bank-owned property, such as have the bank “pay the closing costs.” Look up a local Title Insurance company online, and find out which party is responsible for closing costs in the county of purchase.

    If you want the house, put the $ 17K down for your 20% downpayment, forego mortgage insurance, and then fix up the house on your own. Low balling foreclosure homes can backfire. The time to low ball is pre-foreclosure.

  3. Reply
    Michael H
    February 13, 2014 at 4:04 am

    First, if you have a Realtor, ask what is “normally acceptable” in that part of the country with regard to making an offer. Remember, if the house is advertised on a listing for 84, and the market value is much higher, you will probably need to show the bank “good reason” why you are going to offer less than the listing – especially if you are also wanting them to pay for closing costs as well. If the bank truly does have “several offers” the agent may be telling the truth or blowing smoke. If the listing agent is known to be of high moral and ethical character in the community, chances are that person is telling the truth. In my part of the country, an average home sells for roughly 5% less than the listing price. If the house is well priced considering its Fair Market Value (FMV), then give the bank close to what they are asking. You really need to get a BPO/APO or what is commonly called a “Broker Price Opinion/Agent Price Opinion” to really know what the best price to offer would (or should) be. Your Realtor should be able to assist you in this matter and then, based on having the information you need, PUT IN AN OFFER. Get that price opinion soon!

  4. Reply
    February 13, 2014 at 4:09 am

    if you were approved for an FHA loan and the home is “as is” the work needing to be done can not be things that would effect you being able to move in right away, such as water heater (not having one). For an fha loan to be approved the property must pass fha requirements this may be a hurdle for you

  5. Reply
    February 13, 2014 at 4:51 am

    A lender won’t pay your closing costs.

    What you need is a FHA 203b loan which allows you to have some funds available for remodeling.

    Make your offer, if there are multiple offers, it is quite possible the lender will reject them all and ask potential buyers to bring their best offer.

  6. Reply
    February 13, 2014 at 5:41 am

    Ask about a FHA 203K loan, which is a loan that provides an escrow and once you’ve completed the repairs, they reimburse you. But not all lenders offer this type of loan. Some will tell you it isn’t available. But you do your own homework and get the truth. Wells Fargo I believe offers 203K loans.

    Your offer should be your best offer. But before you do that, PLEASE PLEASE PLEASE pay to have a home inspection. You risk thousands of dollars in repairs on some of these foreclosures. Don’t take that risk. If the inspection finds issues that you don’t care to take on, then withdraw your offer based on the inspection.

    Isn’t your Realtor helping you with these questions? If not, you have the wrong Realtor. You need one that has experience dealing with the lenders and these types of properties. Not every Realtor can handle the complex issues that come up on these.

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