REO offer right after we get a contract?

[kygirl]

I am interested in a REO property that I intend on living in. It needs about 150,000 of repairs. They are asking 400,000 (it has been on the market almost 90 days). I currently have my house up for sale and have had someone look at it twice. I have a pre approval letter from the bank. However, the bank I am talking to (and others I've spoken to) seems clueless as to what kind of financing I would do on a house like this. My realtor is no help either. That being said, assuming I get an offer on my house, could I make an offer on this REO house or do I have to wait till I "close" on my house to make an offer? Secondly, what type of financing options do I have on a house like this? THANKS

[Madtown RM]

I am not a lender nor do I have any information on which to base a recommendation for the type or types of mortgage loans that you might quality for. You should either ask your Realtor to refer you to a lender or go to your current lender and ask what loan programs you qualify for (merely asking that will not obligate you to work with them but should give you an idea what your options are). In answer to your other question, no you should not have to wait until you close on your current home before you can make an offer on the REO. Although the lender who has repossessed the house you're interested in purchasing may not like it, you could submit an offer contingent on the sale of your current home. You should discuss this and other options with your Realtor or look for a new Realtor if you're unable to get your questions addressed.

[Toby Lane]

You would need a construction or renovation loan. Problem is they are hard to come by these days. You may have to pay for repairs out of pocket. There is a loan called a 203k that will pay up to $35,000 toward repairs. That might get some of the work done. The 203k has loan limitations on it based on county, so check with your lender.

[jsdomino]

There is very little chance that you are going to be able to pull this off.

First of all no lender is going to approve a loan for a new home until you sell your old home. Bridge loans are a thing of the past.

Second, if the house is $400K and you need $150K repairs, at $550K you will be well out of FHA guidelines.

The only chance you have is "private" money which is expensive. Then you will likely have to hold the property for 3-6 months before you can refinance it to conventional mortgage. This will take the "bargain" out of your bargain home.

You are better off just finding a nice house that is move in ready (or needs minor work) and enjoy your new home.

[John Landry Phoenix]

Kygirl,

Joseph is probably right about your purchase being out of FHA Guidelines but check withyour local lenders to see what the limits are in your area. There are a few high cost of living cities that have limits higher than what you need. In regards to the 203k loan with the $35,000 limit that is for for what they call their streamline program. Their full blown 203k program does not have a limit on the amount of construction but there is a limit on the total loan amount which is your areas FHA limit. If you have money to put down on the property there are still loan programs out there that have a one time close which address the acquisition financing as well as the improvement. These days they are usually requiring the borrower put down 20% of the total project costs. You might want to talk to a portfolio lender such as Washington Federal (Not WAMU) if they are in your area. I like them because they do not sell any of their loans so they have a more flexible and personalized underwriting process. They are not the only lender that does this type of financing though so look around. Good luck!