HUD 203k Consulting
Buy it & Fix it – ALL IN ONE LOAN!
As you search for the home of your dreams, you have a general idea of what that is, but each property you view either is out of your comfortable price range or seems to be lacking in one way or another. With a Renovation Loan, you change how you view the homes from what they are, TO WHAT THEY WILL BE!!!!
There are various options out there, but each opens additional options to home buyers who may wish to create immediate equity by buying a foreclosure and renovating it.
203K FHA LOAN
FHA 203(k) STANDARD
In 1978, the Federal Housing Administration (FHA) introduced the FHA 203k Mortgage Insurance Program which enables borrowers to purchase or refinance their home – including the costs to renovate it within the same loan. This program allows borrowers to make a wide range of improvements, including structural changes & additions to the building “footprint”. Features include:
- Opportunity to borrow against the value of the home after improvements – up to 110% of future value!!
- Low 3.5% down payment
- Flexible Credit Qualifying
- Available for owner-occupied, 1-4 unit properties, Planned Unit Development (PUDs), Condos, and Real Estate Owned (REO) Properties
- Loan size is determined by the limit set by the FHA for your area
- Repair budget is calculated based on the appraisal, your credit limit and the purchase price of the property
Examples of Reason’s to do a 203(k) Loan:
- As simple and minor as needing appliances or upgrading the appliances.
- Luxury items like a jetted tub may not be allowed.
- Adding hardwood floors, new counter tops or a kitchen missing entirely.
- Broken pipes, chipping paint, mold or lead paint issues can all be included in a 203K loan.
- An addition, full scale remodel, or adding a garage
Useful U.S. Department of Housing & Urban Development web sites:
FHA TO REDUCE ANNUAL INSURANCE PREMIUMS
FHA has updated their LENDER LIST search capability. Check here to search for HUD-approved Single-Family &/or Multi-family lenders, using a variety of criteria, including:
- Lender Name
- City & State
- Mortgage Originator &/or Mortgage Servicer
- Home Equity Conversation Mortgage Program Lenders
- 203(k) Rehabilitation Mortgage Insurance Program Lenders.
Real Estate Broker / Agent
If your not familiar with the FHA 203K loan process it can be quite a cumbersome, and tricky one!
Have you been told a property needs a cash buyer?
This product is the solution to being able to obtain it without a cash purchase!
This product is the one tool available in the market place with FHA rates that can be used to finance a property in need of repair.
A large percentage of the business profession prefer to steer clear of this product due to its’ complex layers, and added timeline needed to close. However, for the savvy and experienced Real Estate broker this product can be your best friend in a sea of properties requiring cash which would not be able to be financed without such a product.
In a nut shell, it is a FHA product typically about 1/4 point higher than standard FHA rates. The minimum percentage down required stays at 3.5%. The average closing timeline is 45 to 60 days. Most individuals use this product as a short term strategy to obtain the property. Then 120 days after the repairs are completed a Streamline FHA Refinance is used to refinance the property into a lower rate.
Mortgage Brokers / Loan Officer
- Contractor Bid Package Preparations
- Contractor Bid Meetings
- Draw Inspections
- Feasibility Studies
- FHA Minimum Property Standards
- FHA / VA Compliance Inspections
- HUD/ Section 8 Lead Based Paint Visual Assessment
- Occupancy Inspections
- Project Work Write Up
Member of National Association of FHA Consultant