Remodel & Home Loan All In One FHA 203k Home Loan
Some of you might have heard about the wonderful Remodel & Home Loan All In One FHA 203k Home Loan while others might be soon pleasantly surprised. I think this product deserves some more attention and it’s finally beginning to get some more much deserved steam. There are countless homeowners and lenders that have had much success with this product over the last couple of years.
What is the FHA 203k Home Loan exactly?
For new home buyers, one can purchase a house/fixer in “as in” condition and basically finance the construction/rehab costs into the loan. On an FHA purchase, this means that a home buyer would have to come up with only 3.5% down payment (plus maybe any closing costs) and finance perhaps $20k or $100k into the loan and perform the repairs after close of escrow. Otherwise, on a regular FHA program, a buyer would not be able to obtain financing. This holds true to refinancing a house as well. Cash out transactions are tough to obtain and sometimes a homeowner might have problems pulling the cash out since the property might not be financable. This would allow a homeowner to fix their house in a similar fashion that someone could purchase a fixer.
The program has some negative attention due to lack of experience in my opinion along with a lack of an experienced team put together to get this done, however, it’s not really that challenging of a product when the pieces are lined up correctly. Depending on a few factors, most escrows should be between 45-60 days just to leave oneself some room for error. Also as a word of caution, buyers and homeowners should have some disposable cash available in case the project comes up with unforeseen expenses and runs over the budget. There are certain items that tend to run over estimates such as pest, electrical, plumbing, etc…
Below you can find what kind of repairs can be done with this product. Please keep in mind this is for the FHA 203k streamlined loan and not the 203k full blown program. The full blown 203k will be discussed in another article and entails much more complicated projects.
203k STREAMLINE
* Used for minor cosmetic work
* Should ideally be used for no more than 3 jobs total
* No consultant / engineer / architect required
* Property cannot be vacant for more than 30 days.
* Work must be completed within six months.
* Work must be professional.
* If job requires a permit, borrowers must get a permit and a sign-off.
* Work must commence within 30 days from closing.
Eligible Repairs & Improvements
* Roofs, gutters and downspouts
* HVAC systems (heating, venting and air conditioning)
* Plumbing and electrical
* Minor kitchen and bath remodels
* Flooring: carpet, tile, wood, etc.
* Interior and exterior painting
* New windows and doors
* Weather stripping & insulation
* Improvements for persons with disabilities
* Energy efficient improvements
* Stabilizing or removing lead-based paint
* Decks, patios, porches
* Basement completion and waterproofing
* Septic or well systems
* Purchase of new kitchen appliances or washer / dryer
Repairs Not Permitted
* Landscaping or yard work
* Major remodeling
* Moving a load-bearing wall
* Room additions or add-ons to the home
* Fixing structural damage
Disbursement of Payments
* Maximum of two payments to each contractor, including the borrower, providing the borrower works under a “self help” plan.
* No more than a 50% advance is allowed.
* Do-it-yourself allowances do not include labor; only materials costs are allowed. This has been also HIGHLY discouraged and most investors do not allow self help.
* Final payment is paid after submission of evidence of payment to sub-contractors / suppliers or other possible lien claimants.
Good Luck and as always feel free to contact me directly with any questions you might have regarding my postings or products at www.fhamadesimple.com
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Tags: Bing, Closing Costs, escrow, home, home buyers, Home Loan, HUD Homes, Kitchen, lender, loan, moving, new home buyers, Painting, property, Refinancing, remodeling
Posted by 
March 30, 2010 - 6:41 pm
It is much wiser to invest than borrow. Borrowing money can cause a decrease in cash flow. Some people are fond of borrowing money from many cash out-lets, leading to bankruptcy. Too much of lending also leads to a decrease in cash flow. That’s the reason why banks have lending limits.