Purchase your house with renovation loan – What are the steps you need to follow?
Short sale and foreclosure have become very common in the real estate sector. The main problem with such kind of houses is that they are in a bad condition and as such can’t be purchased with an FHA or a conventional loan. Some questions that will arise in your mind are how can you purchase a house that has water damage, how can you buy a house without proper kitchen. One option for it is to purchase the house with hard cash. The other option is you may take out a renovation loan for doing the needed repairs in your house.
4 Steps to purchase your house by means of a renovation loan
A renovation loan is one where you may use the money for purchasing your house and doing the renovations required. Check out 4 steps that will enable to buy your house with the help of a renovation loan.
- Submit application for renovation loan – The first step for it is you will have to submit application for taking out renovation loan. There are actually two kinds of renovation loans – FHA 203k loan and conventional renovation loans for bad credit. You need to decide as to which kind of loan will be suitable for your case. FHA 203k loan will be suitable for the ones who have only the minimum amount needed for home purchase. Get in touch with the loan officer to find out which loan will suit you the best.
- Collect a list of the contractors – You need to search for a trustworthy contractor who will provide you the approximation for doing the work. Make sure that the contractor you choose has a valid license. If your house needs several repair, you might require appointing a general contractor who will be hiring the sub-contractors. The bank will give approval to the contractor whom you may choose. You can ask the contractor if he has ever worked with renovation loan.
- Choose your contractor and estimate amount – You need to choose the right contractor and the estimate amount that you will be submitting to the bank. After this, the bank will be working with your contractor so as to get him approved. In case the bank doesn’t approve your contractor, you will then have to choose another contractor and thus, another estimate.
- Search for your dream home – You will have to contact an authentic realtor who will help you search for your dream home. Tell the agent that you’ve got approval for renovation unsecured loans that you only need to find your house now. After you find your house, you need to know the needed estimate. If possible, you should try securing a minimum of three estimates for the necessary repairs. The house needs to get appraisal for the repaired value and it should be either equal or more than the loan and repair amount.
Buying the house you really want is undoubtedly a daunting task. However, you will have to be very careful when choosing your home. Thus, the above-discussed steps will enable you to purchase your house with the help of a renovation loan.
- Thanks a lot for reading my article “Purchase your house with renovation loan – What are the steps you need to follow?”