Financing in 01915>Question Details

Lucy, Other/Just Looking in 01915

What is a 203K loan? It appears to be some sort of rehab loan? What is needed to qualify? How much can you request? How do you do apply?

Asked by Lucy, 01915 Mon Dec 27, 2010

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From my experience with 203k loans, the best advice is to use a lender that offers assistance via third party with 203k processing.
This shortens the closing time by weeks. Try http://www.cfs-mortgage.com/203k for more information.
1 vote Thank Flag Link Sat May 25, 2013
I would argue the need for a 3rd party to manage the process would indicate the Loan Officer that you are working with lacks the experience to manage the process properly. I would agree that you need to have someone involved in the transaction that has real experience closing renovation loans and not just access to the program.
Flag Sat Nov 2, 2013
The 203k is an FHA loan that allows a borrower to include construction costs, improvements, etc into the mortgage and do this work AFTER the loan is closed. More information can be found at http://203kContractors.com/faqs .

-----
203kContractors.com®
Contractor Directory for the FHA 203(k) Loan
(480) 463-4663
Web Reference: http://203kContractors.com
1 vote Thank Flag Link Tue Dec 28, 2010
203k loan is a government program that enables you to purchase a home and finances certain upgrades and repairs as part of your mortgage.

For more details about 203k loan, visit http://www.cfs203k.com. CFS Mortgage and RenovationReady brings together more than 50 years of traditional and renovation lending know-how. Let their team of experts help you.
0 votes Thank Flag Link Sat Nov 2, 2013
I know just the mortgage person to help answer all your questions, Give me a call at 351-201-6038 it is my cell phone here in mass, Usually it covers major repairs to a home like the first answer, roof, heating system, replace what is now most likely missing copper pipes from the basement, and needed electrical updating. Before putting in an offer you would need a lot of estimates so as to not under cut what you would need to be approved for.
0 votes Thank Flag Link Fri Sep 27, 2013
According to the HUD website, a 203K loan is........
"... designated for houses that are damaged or sorely in need of rehabilitation. The loan covers not only the cost of the property but also the cost of necessary home repairs. The down payment requirement is low, and eligibility criteria are loose. Homeowners whose homes need improvement can also refinance with these loans. A vast range of repairs, including room additions, bathroom remodeling, roofing, flooring and air conditioning systems can be funded with these loans.
Which houses qualify?
There are two types of FHA 203k loans, regular and streamlined. Regular 203k loans are for homes that need structural repairs, and streamlined loans are for those that need non-structural repairs.
In order to qualify, homeowners must plan to live in the home they are repairing. The following types of residences qualify:
Tear-downs: As long as part of the foundation will remain, houses that need to be destroyed and rebuilt are eligible.
Existing construction that is at least a year old.
Single-family, two-family, three-family or four-family dwellings.
Condos: if they have been approved for FHA loans.
Mixed-use properties: If you are repairing only the home portion, a mixed residential/commercial property can qualify.
Homes needing to be moved to rest on a new foundation."
0 votes Thank Flag Link Fri Mar 22, 2013
From my website, you can access the Federal Housing and Urban Development (HUD) website which includes full detail about the Federal Housintg Adiministration (FHA) program including answers to all of your questions. Under "my external links" click on the HUD Guide to Home Buying link. Happy Trails.
0 votes Thank Flag Link Thu Jun 30, 2011
I do to. Feel free to use it!
0 votes Thank Flag Link Tue Dec 28, 2010
I like the nickname..."Baby K's"
0 votes Thank Flag Link Tue Dec 28, 2010
Your are correct, Andrew. For Full blown 203Ks you almost just basically need a foundation in place. My outline deals with 203 Baby Ks. I should have made that clearer. Thanks.
0 votes Thank Flag Link Tue Dec 28, 2010
I would find your lender and then the Hud Consultant. Just like not all lenders are the same the same holds true for HUD consultants.

I mainly use 3 consultants:

Greg Story
Phil Murphy
Mike McDermott

All 3 prepare a thorough work write up. Any of those three would be able to do the consultants work in Beverly.
0 votes Thank Flag Link Tue Dec 28, 2010
Yes, all good answers.

Rudy sets out the "Streamline K" loan fairly well and Andrew reminds you that the original loan product is available for larger projects (look at it like the parent and the child program of rehabilitation). The Streamlined K is for small easily fixable items: Roof Repair, Appliances, Painting, etc. The Standard K is, among other requirements, for repairs that require structural changes, larger loan amounts, etc.

With respect to items and how they're added to the list of repairs, there are certain elements of the home that will need to be inspected and considered mandatory. The government encourages you to seek the an experienced individual who will guide you through the rehab. The best advise is to hire an approved 203(k) Consultant.

Find a consultant near you by searching the HUD database: https://entp.hud.gov/idapp/html/f17cnsltdata.cfm

Join the 203(k) Forum @ http://www.203kforum.com

Gary Smith
http://www.garynsmith.net
203K Consultant/Contractor
Web Reference: http://www.203kforum.com
0 votes Thank Flag Link Tue Dec 28, 2010
Do your resurch and go to a banker/broker who knows what he is doing.
As it might take months if you go for the slower lender.
0 votes Thank Flag Link Mon Dec 27, 2010
Rudy,

You have outlines the streamline prodcut and not the full 203K. The full 203K loan I have done complete gut rehabs on as well as major additions.
0 votes Thank Flag Link Mon Dec 27, 2010
Hi Lucy,

I am a local Mortgage Banker in Massachusetts that specalizes in this type of mortgage program. I would encourage you to have a conversation with a qualified lender about how the loan works as there are many detailed steps in the process. It is important to understand the 203k program to determine if it is right for you or not.

Feel free to contact me if you have any questions. Good Luck!
0 votes Thank Flag Link Mon Dec 27, 2010
Hi, Lucy. Here go. Now some requirements may be state or lender specific, so you are encouraged to speak with a local LO for any possible updates or changes. But, for the purpose of having a general understanding, the following should help:

FOR THOSE CONSIDERING a 203k loan, this blog is dedicated to explaining the guidelines and necessary steps required:

APPROVAL GUIDELINES:
- Buyer must qualify as they would for a typical FHA 203b loan
- Like Up Front Mortgage Insurance (UFMIP) the cost to do the repair/renovations are rolled on top of the loan and the buyer must qualify for the new total loan amount.
- Interest rates for 203k are higher than the standard FHA 203b.

PROCEDURAL GUIDELINES:
- Loan limit is up to 35K.
- PA has to state that the buyer is seeking a 203k, and that the contract is contingent on lender approval.
- Estimation of repairs/updates has to be submitted by a licensed contractor approved by the lender.
- Contractor has to begin repairs within 30 days of the close and must finish within 30 days of the estimated time to complete the work.
- Upon completion of work, the appraiser that previously inspected the home comes back out to reinspect the completed work for FHA compliance.
- If not already occupying property, buyer then takes full possession of home and moves in.

ACCEPTABLE REPAIRS/UPDATES:
* 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
* Purchase of washer and/or dryer

UNACCEPTABLE REPAIRS/UPDATES:
* Landscaping or yard work
* Major remodeling
* Moving a load-bearing wall
* Room additions or add-ons to the home
* Fixing structural damage
* Installing swimming pools
0 votes Thank Flag Link Mon Dec 27, 2010
You need work with mortgage broker who offers FHA loans these types of loans.

THEN submit a loan application loan officer will review your financial provide you guidance required.

GREAT QUESTION

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Mon Dec 27, 2010
Salem Five offers the 203K loan aswell. I personally closed 38 Renovation loans on 2010. looking to double that in 2011.
0 votes Thank Flag Link Mon Dec 27, 2010
Hi Lucy. You got some excellent answers to this question. I know that Wells Fargo and Prospect mortgage offer FHA 203K loans, among others. Contact a mortgage lender to discuss the qualifying guidelines and, as mentioned by others, be prepared for a lengthier process than for a normal loan.
0 votes Thank Flag Link Mon Dec 27, 2010
Lucy,

this is a popular program for someone looking to buy a home where it is need of repairs to make it habitable again. The qualifying for this loan is the same as if you were qualifying for a regular FHA lona. The only difference is you are rolling into your loan the cost of repairs needed to get the home fixed.

the process is a little more lengthly as well. You have to get quotes from reputable insured contractors for the repairs to be done to the house. generally the attorney doing the closing will hold the money for the repairs in an escrow account. You have a defintive time frame form when you close to get the repairs done to the house.

The program is great but requires a lot of work up front from the buyer to get everythign lined up....Then you need to find a bank that does them. Not all banks do a 203k loan.
Web Reference: http://www.davedicecco.com
0 votes Thank Flag Link Mon Dec 27, 2010
Qualifying is no different than a regular FHA the down payment is based on the purchase + cost of repairs. the only limit i sthe county loan limits for FHA financing.
0 votes Thank Flag Link Mon Dec 27, 2010
This is an FHA program which a buyer would use if the property they are purchasing needs work prior to moving in. FHA loans require that the house be in move-in condition to qualify. If the house needs work (peeling paint, new roof etc), then you need to do a 203K loan.

These can be complicated to do and will take longer than a regular loan to close. You have to get estimates from contractors and then you take out a mortgage for the purchase price plus the repair costs. The bank will then give the money to the contractors as the work is done.

For qualification, you have to be able to afford the mortgage and you have to find a bank who does 203K's. not all do it.

Good luck!
Web Reference: http://www.sherriway.com
0 votes Thank Flag Link Mon Dec 27, 2010
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