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Brent Kluge-203k Lender-expert-16years-baltimore-maryland's Blog

By Brent Kluge | Mortgage Broker
or Lender in Rockville, MD

FHA 203K - Refinance and Fix up your existings Home

FHA 203K Refinance - How does it work?

1st - You must pay off your existing debt in the new mortgage.  This means ALL debt that is secured with a lien on the house. In addition, no other liens or encumbrances can exist on the deed. (mechanics liens, back taxes, judgements).  They all must be included in the new loan.

2nd - ALL  the Fees can be wrapped into the loan.  Yes, you will have to pay for some incidentals up front - About $1,000.00 or so, depending on the size of your renovation, but you can get these funds back at settlement.

3rd - Your new mortgage is based on your "improved value", so if you $200,000.00 on your mortgage currently, and it is worth about $250,000.00, not much room in equity.  BUT...  if after putting a 3 room addition on, costing $100,000.00 -  This house will now appriase for $375,000.00, you are in good shape.  We are only looking for the final number to cover your total loan amount. ;)

Lost Count , NEXT - You have the option to even escrow mortgage payments into your loan, in case you can not live in the house during construction and have to live elsewhere.

Then - When you settle, the construction funds are held in escrow and your contractor will submit for draws through your appointed 203k Consultant. 

Finally - When all the work is done, you have an FHA mortgage.  Do nothing and you are fine.  Have 20% equity now and REFINANCE to a conventional loan to drop the Mortgage Insurance.  (this typically can not happen until 6 months after the closing).

Easy - Breezy! 

Fha 203k - Versitile Residential Renovation Loan 

Save yourself time, energy, frustration and money ... 

Work with Experience.

Kluge Out.

Brent Kluge

Cell: 410-591-8300

Fax: 888-557-5271




By Tni LeBlanc, JD, MA, Broker,  Mon May 23 2011, 11:22
What a great explanation Brent. A 203k loan can be a great tool to purchase properties that need work. So many banks are selling inventory as-is and without repairs. An FHA 203k loan is a great tool for a non-cash buyer to pick up one of these foreclosure bargains. Tni
By Brent Kluge,  Mon May 23 2011, 13:46
I agree Tni and thank for commenting! Best of luck to you in your future business!

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