We may have found a (foreclosed) house - help! (long)
DH and I have been following a foreclosure online for a bit now. The whole process started months ago, and this past weekend they've finally hit the "bank owned and on the market" state. We went to the open house, and then last night we brought our very knowledgable realtor with us to check it out more thoroughly. We love it. Well, we love what it could be. It's in the exact neighborhood that we wanted, and the street itself is beautiful. The structure of the house is amazing: high ceilings, large LR, DR, kitchen, master, hardwood floors, back deck, pro installed paver walkway, etc. There's a new roof and chimney, and of the 2.5 bathrooms, 1.5 are brand new.
However, there's also a ton of work to be done. Aside from the lovely tile floor and track lighting, the entire kitchen needs to be gutted: cabinets, countertops, all appliances, even a small wall needs to be knocked out. The master bathroom doesn't even have walls - there is just a gaping hole! The attached garage has been converted into an exercise/man room, but it's not insulated. The detached garage has a huge wooden beam in the dead center (making it impossible to park a car - WTH?!) The carpets are dirty, the hardwood floors need to be refinished, wallpaper is everywhere. It needs the driveway repaved and a fence around the yard (for our dog). And to top it all off, only the entry level floor is ventilated for central air! There are no vents in the entire upstairs: three bedrooms, two bathrooms - nothing! And the downstairs room has one vent in the steps for the whole level - and that includes a large family room, office, half bath, laundry room, and garage room! We would need to have a whole new system with ductwork installed!
I know that this should be intimidating, but we're actually excited by the prospect. DH and I would love to hire professionals to make the kitchen and master bath exactly what we want, and we were looking forward to having a few projects of our own (we're handy, but not handy enough to build an entire bathroom from scratch). The only issue becomes cost. This house is obviously listed low for the neighborhood (about 2/3 of the price of similar sales), and is significantly lower than the cost of homes we had been looking at that are in move-in ready shape. However, the cost of repairs and renovations is clearly obscenely huge.
Our realtor told us about an FHA 203K loan that can be taken out along with the mortgage, but the total loan can only equal the home's appraisal value. For instance, (these aren't real figures, just an example), let's say the house sells for $250k but is appraised for $300k - we could only take out the total loan for $300k - meaning only $50k for renovations. And I'm not sure, but I think we can also only have certain approved contractors do the work if we borrow more than $35K (which we would clearly have to do.) That would mean our tried and true contractors might not be eligible :(
Now here are my questions:
Have any of you bought/tried to buy a foreclosure? What was your experience like?
Do you have any knowledge of the FHA 203k?
If you're only average/above average on the handy side, did you try to tackle any big projects yourselves? How did that work out?
Did you have to hire certain contractors?
Also, I heard that people who take out FHA 203ks have the opportunity to buy necessary appliances for a discounted rate. Is this true?
Thanks so much ladies!