My spouse and I are looking to buy a foreclosed home with 4 bedrooms and 2 baths. We currently rent and have not owned a home before. The home we are looking at is located on state game land and is under foreclosure.
We did a walk through with the Realtor and was told that the roof needed replaced because of a tree limb falling through the roof and that the roof had accumulated significant mold from the surrounding trees.
Upon further walk through, we noticed that the home has what appears to be black mold on some walls, can this be removed? Other than the roof and black mold, the home seems to be in very good shape.
The home is a foreclosure so the Realtor said that we could qualify for the Fannie Mae renovation mortgage. The home has dropped in price over the past year from $129,900 to $119,900 to $109,900, down to the price now which is $99,000.
Being a first time home buyer, what do we need in order to purchase this home? Should we go with the Fannie Mae renovation mortgage or with another type of mortgage? Is it worth buying a foreclosed home with problems or should we look into another home?
===ANSWER===
Hi Derek;
It's good that you are looking at buying your first home. Thanks for asking some questions here on my site for all to benefit from.
It sounds like you can buy a lot of home for just under $100,000.
I suggest you be sure that the repair cost when added to your mortgage does not exceed the home value. The bank will not allow it anyway, but it is a quick way to see if you will have equity in the home when you close.
As far as black mold, you can wash the walls with a bleach and water combination and then use a stain kill on it before you paint. This stops the mold from bleeding through.
The mold problem on the roof will be gone when you replace the roof so this should not be an issue.
Now, as far as the Fannie Mae Renovation loan. This does take a rather good credit record in order to get this loan. So if your credit is in good shape this should not be a problem.
If your credit is less than perfect, FHA has a similar loan product called the FHA 203K loan.
Other than that, just do your home work on property values and such. Be sure the home is in a good school district, close to shopping etc.
Think about reselling when buying a house. I know it seems strange, but you have to look at it as if you were selling, not buying.
Even if you plan to never leave, this is the best way to buy. Always think about the next buyer. Will they like the location? Will they like the school district?
Hope this helps.
Jeff
Comments for
What is needed in order to buy this house?
What is needed in order to buy this house? by: Kimball
I'm looking at foreclosures also. This helped me understand that there are loans available to help finance the repairs. I was also concerned about mold. Thanks for the tip on how to get rid of it!
When I'm looking at foreclosures, I know there will be repairs. So it is good to know you can finance some of them.
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