Posted by Paul Macdonald on March 20, 2001 at 08:15:16:
There is a HUGE difference in how they will be calculated and underwriten. Most A lenders will not allow major deferred maintanence. The repairs will have to be completed prior to settlement for those folks. Top that off with the fact that you are also restricted on seller contributions of any type (usually up to 6% for owner occ. and 2% for investor units).
So based on your limited information provided I think you should take your seller flexibility and get as much as possible contributed towards closing costs and go to a purchase renovation loan (100k purchase with repair funds added on the loan). That should work fine. It will also be your least expensive route. You get the funds slightly above (assuming A credit) norm with an escrow account set up by the lender for repairs. They’ll usually make the renovation escrow about 150% of estimated costs. Any unused funds in the escrow will be used to pay down the balance when repairs are done.