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by Anonymous on January 21st, 2009

Anonymous

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Bought a foreclosed house for $30k cash. I've begun to make repairs to maximize value but will need to take a loan for debt consolidation & larger home improvement projects. With fair credit, what kind of loan should I ask for and when is the right time?

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Answers. 1 helpful answer below.

  • by jrshaw on February 17th, 2009

    jrshaw

    Since I am now purchasing a house, I have some experience with the process.

    Obviously you would want the lowest rate you can get. To do this you would want to present a package to the bank that would have the lowest risk to them. Talk with the bank. Talk with multiple banks in fact. It is competitive out there. Some banks are more eager to lend than others. Some want certain types of loan over others. I have seen differences in interest rates as much as 1/2% for the same loan.

    Since the foreclosed property is empty, it would be a higher risk to loan against. I would therefore suggest a bridge loan or a line-of-credit loan that is backed or secured by your personal residence.

    Once you complete the fix up and sell the house, you can pay the loan balance down to zero and start over. This of course assumes that your existing personal home loan is not underwater and there is equity there to work with.

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