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What does a home loan cover?

I want to buy a home, but its a bit of a fixer-upper. If I ask for more than the house is worth, will I be able to use that money to fix/update the house? How exactly do home loans work?

6 Comments

  1. realtor.sailor says:

    If it’s not in move in condition then it won’t qualify for a conventional loan. You would need a renovation loan like FHA203K. A renovation loan gives you the money to buy the home and enough (max $35,000) to make the repairs.

  2. Pascal the Gambler says:

    In the vast majority of cases, they do not lend more than the house is worth.

  3. DOUGLAS says:

    You need to go talk to a bank or credit union. Usually, they will not loan you more than 80-90% of what the house is worth NOW – certainly not more than the house is worth. You may be able to get a second loan (an equity line of credit) to make improvements but you won’t know unless you discuss this with a local lending institution.

  4. BullRooster says:

    Banks do not like to lend on fixer uppers at all so you might have trouble getting a loan for anything. However, there are 203K loans where the bank will let you borrow the value of the home plus more $$$ for repairs. The money is kept seperated from you but as repairs are made it will be given to you piecemeal. With this you can borrow a percent of what the home should be worth when the repairs are done.

  5. tro says:

    you are going to ‘flip’ this house? sure lots of people have made good income doing this
    when the market was good
    you need to check the market where this house is located before you take the leap

  6. Brandon Leibowitz says:

    A type of federally insured mortgage product for individuals who want to rehabilitate or repair a damaged home that will become their primary residence. In addition to the funds to cover the purchase price of the house, the FHA 203(k) loan provides the money needed for repairs and related expenses as part of the loan.

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