OK. Let's say I have a 100K approval for a loan but the house I found is 40K. How much should I borrow?

Question

Should I borrow an extra 20K in escrow to pay for PMI, property taxes and repairs? Or, should I take closest to the selling price so I can pay it off faster?

Answer 1

Unless you are using a very specific FHA loan you can not borrow more.  Concessions (closing costs, escrow....etc) are a separate issue than money for a home rehab.  Ask your lender specifically about the FHA loan 203(b) (I think that is the specific loan name) many lender are either a) not familiar with the program or b) are unable execute the loan because they are not certified to.  Either way if this is the road that you want to travel and your mortgage guy can't get you the 203(b) go to someone else that can.  Best of luck

Answer 2

The lender will only approve you for what you’re paying for the house. If the purchase price is $40K, your loan is for $40K.  You can get UP TO $100K. That doesn’t mean they’ll give you $100K no matter what. If you want money for repairs, talk to your lender about ways to make that happen.

Answer 3

If the house needs repairs and u want to get it done soon, i would advise taking what you need to buy and repair the home. If you dont want to repair it now and want to do it over time, then it would be best to take the amount of the home.

Answer 4

Well, keep in mind you'll likely want to make changes, possibly carpet or hard wood floors, might need new appliances, etc...

I wouldn't borrow the entire approved amount (no need to get too far over your head if it's not necessary) but I would go for an additional 20k for things like I mentioned.

Answer 5

It depends if the house needs urgent repairs. If not, don't borrow more than you need. Seriously, you'll regret it.

Answer 6

I think a 25% its a reasonable extra