questions about purchasing our first home

[Hotrod Addiction]

Well the time has come and me, the wife and the kiddo are looking to purchase our first home. I am in the Air Force and by the end of the year we are either going to move to a new state and buy or stay where we are and buy. Either way we will be buying. We are both tired of ******* away money into rentals and want somewhere we can call our own. As we most likely will not be living there forever I have no plans for building a shop so an at least moderately sized working space is required. We have looked at a couple different places that we are interested in. The one we looked at today we looked at without a realtor so we just peaked in the windows and walked around the place. It is ideal for what we are looking for 10 acres of prairie land 5 bedrooms 3 baths a 24'X52' shop. My concern is that it does appear to require some work. When I looked in the basement window I saw that there was no carpet and the entire bottom half of the drywall had been removed. So it appears the basement had flooded. I don't know how long the property has been vacant there is a note on the window said something about personal property being left behind and the home being sold to the bank by a "trustee." Does this mean the house was forclosed on? The rest of the home appears to be in excellent condition inside. The outside is weathered and needs standard repairs paint, probably some roof repairs etc etc. The plan would be to finance above the final sale price for needed repairs/renovations. I'll throw in some pictures and a link the listing. It's listed at $140,000.
My questions are:
1. Does this seem like a good buy?
2. Has anyone bought a home that needed repairs and rolled the cost of said repairs into the mortgage?
3. If so how did it go?
4. The apparent water damage worries me. Should it or should I assume the underlying cause has been FULLY repaired?
5. This will be a VA backed loan will I have problems with financing repairs with a VA loan? Thanks everyone for your help.
http://www.realtor.com/realestateandhomes-detail/15064-220th-St_Box-Elder_SD_57719_M85327-11564

 

[Hotrod Addiction]

I guess I should add that I am a carpenter/maintenance worker by trade so actually doing the repairs isn't the problem. More Photos.

 

[rice rocket]

You should assume that it has not been repaired. Did you check if it was in a flood zone?

https://msc.fema.gov/

 

[John Timmins]

BEWARE ! MOLD ! I know a family that tried to live in a dried out house and each member of the family got sick. Mold remediation is costly and after hurricane Charlie my buiilding took 8 months of professional cleaning before it would pass an air test.

It is flooded once it can flood again. I would be very wary of this. Another thing...many loans perhaps even the one you have in mind will not loan $ on problems. Before you get your hopes up, talk to the lender about seeing if they will even loan money on that house. You get all this house buying checkoff list finished and THEN they send the surveyor or home inspector and find a problem.

I would also go to the yellow pages and find an attorney that specializes in REAL LAW. Tell him what you want to do. Tell him you want him as your personal representative and that HE will personally be at the closing. The seller, especially a seller's realtor or bank will hate this. Never use or share the realtor's attorney to save money. If it is a private sale discuss the sale numbers witih your attorney who will insist on doing business with the seller's attorney.

Remember YOU are in control of this sale. Get the house inspected for termites, mold, structure and make the buyer help pay for it. Finally trust your instinct. Buy with your brain and not impulse. Good luck

 

[67carl]

When I bought my first house 10+ years ago I used a VA loan. They look for very specific things when they do an inspection and will not approve if one of those thing is out of whack. I wish I could remember the specifics but it was long ago. I would think flood damage would raise a flag. You should be able to find out easily with a Google search or even look through the VA website what they want and don't want to see. Nice thing about the VA loan is you don't have to pay PMI... Good luck and congrats on getting your first home (when you do get one). I'm still in mine and it has been awesome to have.

By the way, what the hell is that white stuff all over the ground?

 

[ACDNate]

Yeah VA will definitely not approve that home, if that's the financing route you were going to go.

Do you have a definite timeline on how long you'll be at your current duty station? If you are buying fixer upper, make sure you've got enough time to get it fixed up or you may have difficulty selling it when you move.

 

[theoldwizard1]

2. Has anyone bought a home that needed repairs and rolled the cost of said repairs into the mortgage?

That will NOT happen in today's mortgage market.

4. The apparent water damage worries me. Should it or should I assume the underlying cause has been FULLY repaired?

Just the opposite ! You should assume it has NOT been repaired, unless you have written documentation. Even if it does, you need a contingency clause about passing a mold inspection.

 

[Ray916MN]

.... I am in the Air Force and by the end of the year we are either going to move to a new state and buy or stay where we are and buy. Either way we will be buying. We are both tired of ******* away money into rentals and want somewhere we can call our own. ...

It sounds like you are at the stage of life where your career may force you to relocate fairly frequently. This is typically where renting makes much more financial sense than buying.

Remember if you own a house and have to sell you it will typically cost you at least 8% of the value of the home every time you have to sell and move.

• Realtor commissions are paid by the seller and are typically 6%
• You lose the mortgage points and origination fees, home inspection and closing fees you paid to buy the home
• You lose the PMI you paid if you didn't put down 20% or more of the purchase price
• Unless you are able to sell your home before you have to move for a job relocation, it is possible you will have to pay a mortgage for a home you no longer live in for a period of time when you next relocate.

Lastly although it is possible that whatever you purchase may appreciate in value it is also possible that it may be worth less when you need to sell, so it may cost you even more money when it comes time to sell.

FWIW

 

[billspit]

You need to wait until you know what you want to do. It looks like that house is going to need some serious TLC. Can you recoup that when you go to sell. Look at the comps in the area.

 

[pattenp]

You may be lucky find a lender to give a loan on a property in need of repairs. My son just went through that with a house he wanted to buy. It needed repairs and he could not get an FHA loan on it until the house was repaired and brought up to FHA specs. We talked to a couple of banks about a conventional loan and it was no go unless certain things were repaired first. I'm sure the house you're looking at will need to be up to certain specs before the VA will give you a loan on it.

 

[ctgoodman]

Are you remaining in the Air Force? What are your chances of being relocated in the next 10 years? I wouldn't even consider buying if there is a good chance that you will be relocated withing 10 years. Like others have said you will pay out thousands to do everything with originating the loan and other fees. If you can't stay there for 8 or 10 years you may as well be renting. You need that time to make the improvements to increase the value of the property and for the value to increase. So when you do sell it's in tip top shape.

Never assume anything has been repaired or fixed on any home you are looking at. The seller is trying to get the most equity out of it as possible. Inspection, Inspection, Inspection... likely your mortgage company will require one. You need to know all the details, from termites, mold, high moisture levels, structural problems, age of HVAC, roof age, originating cause of the carpet and drywall removal, and things that are not up to current building code (as you may need to make them so if you start remodeling anything). It could be a foreclosure, or the sell out of an estate, or owned by some company that is dissolved and is selling off assets. Not that anything like that is necessary bad, it just leaves more unanswered questions and you are dealing with people that have no real knowledge of the properties history.

 

[Voi]

1. Does this seem like a good buy?

2. Has anyone bought a home that needed repairs and rolled the cost of said repairs into the mortgage? If so how did it go?

4. The apparent water damage worries me. Should it or should I assume the underlying cause has been FULLY repaired?

5. This will be a VA backed loan will I have problems with financing repairs with a VA loan? Thanks everyone for your help.

I'm in your area (think we've exchanged PM's before) and that seems like a fantastic buy. The market is booming in Rapid so I'm shocked to see that cost per square foot, especially on an acreage. Seems too good to be true. I'd approach with caution.

When we bought our home we had a line of credit included with the mortgage for repairs. It was a bit under a fifth of the amount of the mortgage. We didn't buy much house relative to our income at the time so that loan was pretty easy to get. Worked out fine for us and in fact we didn't even use the line of credit. We just remodeled as we had money but it was nice to have in case anything major came up.

I would not assume the cause has been taken care of. I would find a contractor who can look at the house with you.

Don't know about VA loans.

 

[Falcon67]

We bought a re-po from BoA on a VA loan. I'm not a vet, this is a special program they use to get rid of defaulted VA properties. On the re-po, they will not finance any repair and the house came as-is. No allowances, etc. On new loans for existing sales, VA and FHA are very specific about conditions and status of the property, so agree with above - they likely won't touch it until it's completely remediated. And having helped friends with flooded houses, I would never touch one personally or put my family in one. I don't care if it's once in 100 years, I don't want to ever have to deal with anything like that in my own house.

 

[NUTTSGT]

Here's something you need to ask about. Why are there two meterbases ? Was the garage turned into an apt or a separate service for the building ?

 

[GarageWarrior]

.I am in the Air Force and by the end of the year we are either going to move to a new state and buy or stay where we are and buy. Either way we will be buying. We are both tired of ******* away money into rentals and want somewhere we can call our own. As we most likely will not be living there forever I have no plans for building a shop so an at least moderately sized working space is required.

It costs money to live either way. With owning a house you have interest, depreciation, repairs, maintenance, Realtor fees, closing costs, insurance. Houses can be difficult to sell if you need to move. In many cases it's cheaper to rent, esp. if it's under 10 years.

 

[J.A.Varela]

Slow down ! First it sounds like you're not even sure where you want to live. Figure that out BEFORE you start looking at houses. There's a reason that house is vacant. If you were to buy it, plan on spending the rest of your life in it.

 

[Hotrod Addiction]

Slow down ! First it sounds like you're not even sure where you want to live. Figure that out BEFORE you start looking at houses. There's a reason that house is vacant. If you were to buy it, plan on spending the rest of your life in it.

I do know where I want to live but being in the Air Force there is some uncertainty at times. We have put in for orders out of state and are waiting on either an approval or denial. We are looking at several locations and several properties. I know many people who buy where they are and when the Air Force moves them they sell the home that they've built equity in and put a down payment on a new home at the new base. This is a pretty common practice. Anyhow everyone thanks for all the replies and advice it's much appreciated. We called the realtor and found out the home is under contract so it's a no go anyhow. Oh well.

 

[nolimits76]

FYI if you continue to look at foreclosed homes there used to be an FHA 203b loan program to help with repairs. It's been several years since I explored the option but $X went to buy the home and $Y went into an escrow account for repairs. I don't recall all the details but thought getting reimbursed for DIY projects (big or small) was difficult. I thought the escrow was designed to pay a legit contractor that had submitted a bid, had insurance, licenses, etc.