Money to Purchase AND Renovate Your Wellesley Home
Call Christine Norcross for more information â€“ cell 781-929-4994 or to research the Boston neighborhoods, visit my Wellesley Real Estate or Newton Real Estate websites.Â Search for homes HERE.
Whether youâ€™re looking at a foreclosed home, bank REO, a Short Sale
orÂ really any home, you need to be aware of the FHA 203K Program. The
general condition of real estate has taken a dip over the past few
years, as homeowners are not sprucing up their home as they have in the
(Pssstâ€¦thereâ€™s a recession going onâ€¦people are afraid of losing
jobsâ€¦and they believe they wonâ€™t â€œget backâ€ the money they spend by
renovating upon sale).
The 203K loan can be used for small repairs (with a minimum of $5000
of work)Â such asÂ a new roof or replacing the boiler.Â It can go allÂ the
way up to practically rebuilding the home and anything in between.Â
Maybe you love a home, the neighborhood, etc., but you hate the kitchen
cabinets. The 203K may be for you. As long as the existing foundation
stays intact, we can talk about any type of repair, upgrade,
modernization or expansion.
With one closing, we will give borrowers money to satisfy their
contract with the seller AND establish a Rehab Escrow Account to fund
the agreed renovations. The Rehab Escrow Account is managed like a
Construction Loan. Money is released after work is completed, the
property is inspected by the lender and the title is updated.
Like all FHA loans, the property must be owner occupied and loan
approval requires full documentation of income, assets and credit
worthiness. At the same time, underwriting guidelines have some
flexibility built in. (In theory, we can lend up to 110% of the
After-Improved Value of the home for example.)
Loans are processed in the same fashion as any other loan (in terms
of income, asset and credit) with the exception of the appraisal.
Appraisers work in conjunction with the home improvement contractor and
a HUD Approved Pre-Planner to determine: â€œAs-Isâ€ Value,
â€œAfter-Improvedâ€ Value, costs of construction and the draw schedule of
the renovation portion of the loan. This work typically adds about a
week to the approval process, largely because it should be done BEFORE
contracts are signed.
SOME UNIQUE FEATURES OF THE 203K
- Mixed-Use Properties may be eligible! As long as
the commercial space is no more than the allowable square footage based
on the number of floors in the building and none of the renovation
monies are used for a commercial renovation, the 203K gives tremendous
interest rates for Mixed-Use Properties.
- The loan can be usedÂ to change property usage
(when appropriate municipality approval)â€¦..converting a 1 Family Home
to a 2 Family or a 4 Family to a 3 Family or any variation that stays
within the 1-4 Family boundaries works.
- On major renovations we will finance up to six months payments into the loan. In these cases,the house will not be habitable until after the work is completed.
- There is a Streamline 203K for projects that require less than $35,000 of repairs. Typically, we like to see only one or two items of work that can be done quickly (with one inspection).
It is recommended that you work with an experienced loan officer
when exploring the 203K Program, as there are many details that need to
be considered (from selecting a qualified contractor to the inner
workings of the draw schedule and preparing for different
contingencies). While the program is more intricate, with the right
education ahead of time, it is extremely manageable.
Other articles on Wellesley Real Estate:
Some Home Improvements Offer More Return Than Others in Wellesley, MA
Popular Wellesley, MA Remodel Trends
Remodeling Trends Have Changed in Wellesley, MA
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