Question: VA loan, cheap house, work question – maybe I watch too much HGTV but this is a dream of mine?
I have 18 months left in the service and I’m seriously thinking about buying a home and would appreciate some advice or tales of experience here.

I can’t wrap my head around renting for a few years and throwing all that money away, to be honest, and a goal of mine has always been to own my own home.

I’m looking at living in SE Pennsylvania, ideally in Philadelphia and working and going to school on my GI Bill. I’ve looked and keep running across fixer-uppers or outdated homes for the price of a new car.

I’d like to get a loan for 50k for a ten or 15 year period (even with a low credit score, the monthly payments are around $ 650, which is manageable even with a part time job). 35k would go toward purchase of the house, with 10-15k set aside for repairs, new roof, flooring, kitchen or bathroom, new water heater, etc.

As long as the place is liveable and the repairs mostly cosmetic, I wouldn’t mind living floorless or wall-less for a while and doing some work myself. I understand HGTV makes it look much easier than real life, haha.

Also, my motivation here is not to “flip” a house or make some ridiculous profit in a short time, but to create a home.

Is this feasible? What problems do you see in the plan? Have you done anything like this?

Thanks!
Thanks! This would be my first time around with real estate – so I expect there are a LOT of things I don’t know.

Please keep the great input flowing – I’m learning.
Ideally, I’ll be saving for a down payment and emergency fund over the next 18 months.

tag-on Question: Is a home loan given for the value of the house, or for a set amount? Could you theoretically borrow 80k and put 60k toward renovations on a 20k house?

Answer:

Answer by tkquestion
You are forgetting couple BIG things when you computed the loan payments.

Surely, for $ 50K loan for 15 years at 10% (you said bad credit) would equal to $ 537 a month. On top of it, there will be a private mortgage insurance, escrow for home owner’s insurance + tax, and you’d easily be paying $ 900 a month.

What would happen if you need new roof, new plumbing, or A/C? Each of them will cost you $ 5K to $ 10K. Can you handle that? Worst case scenario… what happens if there are serious structural problems?

If the house is worth $ 35K, you can get a loan for $ 35K. Especially not-so-great credit, the bank will loan you over the value of the house. Also, you’d find, $ 10K will go VERY quickly….