Looking at another 1880's House...

quilt_mommyAugust 9, 2009

Hi there, I posted a while back about a house built in 1823 the Husband and I were looking at, thank you so much for all of your help! We decided even though we love the house, it's too small and too pricey for our needs, even though I think it would have been a good home.

I have come accross another home, this one built a little later, in 1880. What I'm wondering about now is the price, now that you've helped me to know what to be weary of, since it is considerably lower than I would expect it to be. It is currently bank owned, and I looked up in the public records to see what the previous owner's paid for it...which was $30,000 less (in 2000, so nine years ago) than it is being offered for now by the bank. I understand this is probably due to the poor housing market in combination with the home being bank owned.

The red flag at the moment for me is that in the realtor's listing it states that the home qualifies for HomePath Renovation Financing. Does anyone have any experience with this? My Husband is going to call on the house tomorrow so we can view it, and see just what it is that needs work. But are these types a loans something I should avoid or are they useful? Is this how anyone here is renovating their old house? Also, are homes that qualify for these types of loans generally liveable before the renovations that are needed? Or do they only give out the loans to people buying homes that are in severe need of renovation?

Thank you so much for any help anyone can offer!

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This may be a state or local program. I've never heard of it & I work in a large real estate office (in VA) although I have nothing to do with sales or financing & old houses are the exception to what's usually sold. I live in a historic district (very close to the 'bad area' of town) & sales are flat as a pancake so I'm not surprised the price is low, especially if it's a foreclosure. Do you know the condition of the inside? If the realtor is mentioning a reno loan program, chances are it's been gutted or worse. Where is the house located?

    Bookmark   August 9, 2009 at 1:16AM
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Thank you for your response antiquesilver - the house is located in Ohio. I think Homepath & Homepath Reno. are federal loans offered by the govm't after they took over Fannie May. After looking at the website it says that the renovation loans are offered to qualifying homes that either "need some work to be livable" or any qualifying home renovation that will "increase the value of the home". So I don't quite know what to expect. I suppose it's all speculation until I actually see the house anyway. From the photos and description it does not appear to be gutted, the kitchen looks like it was remodeled in the last few years and the bedrooms and bathroom, while a bit outdated, appear to be ok. I guess I'll just have to wait and see. Thank you!

    Bookmark   August 9, 2009 at 9:37AM
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Hrmmm, I don't know the name of the loan we got, but it sounds similar. I do recall very few lenders were able to provide it though. Basically, it allows you to borrow on the home w/o having built in equity. So, we got a mortgage for the house itself, then another loan on top of that. Some would argue that's risky, but combined it was what we could comfortably pay so it was basically just a house payment, same rate. Incidentally, last year we looked into an equity loan to replace our roof, the rate was more than double! So this had been worth it (we didn't apply for the equity loan).

Our house wasn't really livable, though people were living in it when we bought it....we gutted it as soon as we bought it.

Can't really comment on price, just look closely and be realistic about what it's going to cost to fix, and determine if that works for your budget.

    Bookmark   August 10, 2009 at 12:53PM
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Homepath is the fannie may version of a construction loan. It has most of the same rules as other fannie may mortgages except you can borrow money for renovations in addition to the purchase price. They cap it at somewhere around 20% over the purchase price, I think. If they house is eligible for this program, it means that the prior loan was fannie may backed when it was foreclosed. It does not mean the property is destroyed/gutted or requires major work. (Of course, the only way for you to know the condition is to go see it.) If the agent is advertising the program though, I would bet the place needs some work though.

I think there are only a handful of companies that offer this type of loan, so that would greatly restrict your financing options. You may as well give them a call to see what the details are. It might turn out to be a cheap way to finance needed repairs.

    Bookmark   August 10, 2009 at 1:24PM
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Thank you for your responses! You've given me some things to think about - I know it's premature to "guess" what could be wrong before seeing the place. Haven't heard back from the realter about it, fingers crossed. We currently own our home but with a growing family we really need to move up into something with more space...hoping miracles might happen. ;) Thanks again for the help!

    Bookmark   August 11, 2009 at 12:12AM
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