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Illinois foreclosure - 203k-hard money?

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I am looking at a foreclosure and need to do either a full 203k or hard money purchase. I have heard nightmares about the 203k approval process and wondering if anyone can share their experience.


Also, please message me a recommendation for a 203k or hard money lender that you used for your foreclosure in Illinois. I am NOT interested in solicitations from mortgage brokers - I need customer recommendations because, apparently, 90% of the LOs who do 203ks don't know what they are doing and cause massive problems for everyone.


This is for a house in a high value area, so we are talking probably around $450k purchase with $100k of repairs.


FICOs 780+; DTI: <10%



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Based on your score you should be looking at a FNMA homestyle loan.


The most important part is to get a licensed general contractor that is licensed and insured to write up you proposal. The contractor needs to be approved by the lender. you could hire individual contractors for each trade but this would likely cause delay and difficulty getting each person approved.


Make sure the work being done includes all the items needed to pass a 4 point inspection.


You can't do sweat equity. Exceptions exist. But don't plan on it.


I recommend that you find a Wells Fargo renovation loan specialist in your market that does these loan types day in and day out. Closing should take about 45 days.


Compare with a local broker and you'll be surprised how competitive WF can be with rates.


I know people cringe when they hear WF. But the reality is they are the largest lender in the country and have a whole system dedicated to renovation loans which makes their overhead on this product much cheaper then a lot of the competition for this product type.


I happened to work with someone that specializes in renovation loans so to me the process was like a normal closing.


What I have found is that when a GC knows it's a renovation loan, the price for labor goes up. This may have to do with payout structure or the fact they know you are getting a good deal and want a second bite of the apple, probably a little bit of both.


Good luck.

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To make a successful purchase with a FNMA homestyle foreclosure scenario you may need to structure offer differently than your intentions to be successful in getting a fully executed contract. I'd recommend you come in a little bit higher than a typical cash buyer with a cash offer that's backed by hard money and close with the FNMA homestyle loan.


A lot of realtors and sellers don't know how simple renovation loans work or have only heard horror stories.


Keep in mind renovation loans can't finance a property that has an active code violation with the building department. You can fix something that's not code. It just cant be an oustanding violation for title purposes.


If this the case then hard money or cash is your only option.

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Great advice above


Most lenders never see a true 203k - they just dont come up that often

The 203k streamline is a lot more common -


For the 203k the burden is on you to get the estimates and hope that the value is there when it is appraised

The appraisals are based on current value and an estimate of what the value will be after repairs -

Banks like to see the sales price at or below current value and have to see it show a positive equity position for the after repair.


Good Luck -

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