Buy a Fixer-Upper with a FHA 203K Streamline
By Valerie Holmes
January 10, 2008
If you've been passing up buying homes that require cosmetic repairs for lack of funds to fix them up, FHA has a program for you, It is called FHA 203K Streamline Rehabilitation Loan. The 203-K Streamline loan can be the solution. This Program allows up to $35,000 for repairs. The loan is figured into the original loan balance, including impounds, resulting in one loan combining the purchase price plus the cost of the improvements. You then have just one loan. Borrowers are not required to hire professional consultants, licensed engineers or architects. The appraiser or home inspector can put together a list of recommended repairs / improvements. Borrowers can hire their own tradesman without a general contractor. The 203-K loan allows for simple repairs that can be easily completed. Many are considered light cosmetic repairs, but some will require hiring a licensed contractor if it falls out of the borrower's area of expertise. Here is an approved list of repairs / improvements from HUD: Roofs, gutters & 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 .
Conditions & Terms: Borrowers must occupy the property. 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. Some repairs may require a licensed contractor. Borrowers can select among licensed contractors. The lender will review the contractor's experience, background and referrals. The lender will want a copy of the contractor's estimate and the agreement between the contractor and borrower. Borrowers can also arrange to do some or all of the work under a "self help" arrangement. Do-it-yourself projects require providing the lender with documentation supporting the borrower's knowledge, experience and ability to perform the necessary work. 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. Final payment is paid after submission of evidence of payment to sub-contractors / suppliers or other possible lien claimants.
Why Apply For a Loan Below $35,000: There are other programs that available that offer repair cost above $35,000 be sure the loan consultant you deal with understands the Rehabilitation process. With the 203K Streamline the lender is not required to inspect the completed work. The lender is not required to authorize a third party to inspect the completed work. A letter from the borrower or copies of contractor receipts will suffice as notice of completion, providing the lender has no reason to determine a third-party inspection is necessary. As you can now see, fixer-uppers can be good investments when you avail yourself of a FHA 203 K. This loan can also be used for refinances. For additional information contact: Valerie Holmes, Senior Loan Officer.
Valerie Holmes
Senior Loan Officer
Sierra Pacific Home loans, Inc
559-449-9022
800-563-6876
Why use Valerie?
Valerie Holmes is an award winning Mortgage professional with more than 3 decade's experience in residential Real Estate Mortgages and Real Estate Sales.
Providing customer service is Valerie's Priority. Valerie has worked in the mortgage industry since 1982. She has been doing the CalPERS home loan program since it started in the mid 80's.
Valerie is qualified in many programs, including Conventional, FHA, CalFHA, CalPERS, CalSTRS and Reverse Mortgages. If you are purchasing or refinancing call Valerie for total professional service.
EMail: vholmes@sierra-pacific.com
www.Sierra-Pacific.com/vholmes