203k alternative?

[Administrator]

I found a house that I want to purchase in PA. It is a historic farmhouse built in 1800 and literally needs about 185k of work. There is asbestos, mold, structural issues and a ton of plaster, roofing, and utility issues. That said, it is owned by a bank due to foreclosure. They have owned it for 6 months and the price has dropped about 130k in the past year (the owner tried to sell for about 6 months). The asking price is 370k but I know I can get the bank to release it for less, the question is how much less and then how do I rehab it on top of a mortgage loan? I cannot sell my current house until the rehab is done so funds are not available to do it that way. I had a brainstorm but do not want to move further into the process unless I can get some feedback first. I may be completely off mark with my idea but it is worth putting it out there to see if it is an option.I want to finance the property through the bank that owns it for a total of 240k. However, I want 185k of that amount to be a home equity loan. A mortgage of 55k and home equity of 185k is only 65% LTV, the combined payments will be within my qualification and the owning bank still holds both loans for 240k. Can I do this? The bigger question is, do you think the bank will do it?

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(Source: mortgagefit.com)

[hardikvagadiya@gmail.com]

The HUD 203(k) program makes it possible to purchase a property and include in the loan the cost of the repairs and improvements. It is an insured loan program that is available through approved lenders all across the country but is only available to people who will occupy the house. The down-payment requirement is 3% of the total cost-acquisition and repairs.