Talk about your fixer upper!

Houses that need TLC fall into two categories in my opinion:
  1. Outdated, dirty and basically ugly and
  2. Damaged, deferred maintenance, and basically trashed out.

    Fixer Upper

Unless you have a 20% – 30% down payment, you will need to be verrrrrry cautious looking at houses in category two. RD and FHA loans require the house to pass an inspection so broken windows, bad roof, missing built in appliances, etc., are a no go. Somebody has to do those things before closing, and if the owner can’t or won’t, what to do?

Sometimes buyers pay for the repairs prior to closing and assume all the risk. If the property is bank owned, the banks or HUD will not allow buyers to do repairs prior to closing. If the seller still owns the property, what do they have to lose by letting the buyer replace the appliances and the roof? Yep, you got it! Many lenders do not permit rehab loans where you get the cost of repairs in the loan. If you are looking at properties which need TLC, check with your mortgage lender.

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