I've been approved for my USDA loan! Wonder of wonders, I've been approved for $175k
! I'd never dream of borrowing that much, but it's nice to know I have scads of wiggle room. The approval assumes a maximum of $1800/year for property taxes and $600/year for insurance. Still going to try to keep my budget around $100-120k.
My father is worried I'll buy a money pit and regret it when all these extra issues pop up. But I've had my eye on an older home close to work that's been empty and on the market for over a year. I found the contractor who built the addition on the house a ways back and did some updates for the elderly owners. If I didn't have him in my corner knowing exactly what's been done to the house the last ten years I wouldn't even chance it. We are doing a walk-through next week to assess the possibilities.
After talking to the USDA officer this is what the sequence of events would look like for my Direct Loan:
1. Agree on an "as is" purchase price with the current owners
2. House inspection that results in a list of necessary repairs
3. My contractor and I make our own list of updates and changes we would make
4. Both lists are given to an appraiser who values the home as if all items on both lists
5. USDA loans me money for the purchase price PLUS
the repairs and updates up to but not more than the total final appraised value
6. My contractor completes the work on the home (60% disbursed during work, remaining 40% paid upon completion)
7. There is a final inspection to make sure all items are completed as listed
8. Mortgage closing occurs and I start making payments and move in!
Sounds pretty good to me! The only issue is winter is coming so I may come to an agreement with the owners but have to wait for the renovation until spring. I think that I can get the purchase price down such that I can do a moderate renovation (bathroom redo, minor kitchen updates, flooring, some insulation work and a few windows replaced) for $30-35k and still stay well under my $120k max budget.
It's exciting and scary and I might be obsessing over it a little bit but what the hell. Carpe diem! Within reason