These types of loans aren't rocket science but they can blow up if the mortgage broker is unfamiliar.
The buyer and seller needs to realize that these programs do take a little bit longer to put together. Even if the buyer is a strong buyer, the lender is going to focus on the property, the contractor and the construction and make sure that nothing is left to chance. They want to see references and insurance on the contractor, they want to make sure that the property is structurally sound and they want to make sure that all of the necessary repairs are going to be completed. The lender will scrutinize a buyer who is a weekend contractor. If you're not qualified to do the work, you will not be approved. Also as a buyer make sure the broker can provide references of satisfied clients using this program.
If you find a Fannie Mae foreclosure/fixer upper there's a HomePath finance product that rolls in renovation costs.
For other fixer uppers you can check out the 203K streamline (small repairs) and 203K renovation (larger repairs) loan programs through FHA.
You'll want to find a certified and licensed contractor having experience with these loan programs.
In general, the money is help in escrow and paid to the contractor at the completion. (There is some upfront money but it is a small percentage)
Ultimately, you'll be paying your mortgage payment based upon the sale price plus the renovated costs. If there's money left over from the renovation, you can apply it to the loan principal.
I hope this helps!
Home Appreciators Real Estate & Renovations at
Better Homes & Gardens Real Estate Metro Brokers
"Before You Schedule to Show, Call Bo"
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.
Also make sure your agent is familiar with the 203K program etc as it involves some extra attention to detail during the transaction. Not rocket science but the agent needs to be familiar with the process and in touch with the mortgage rep a bit more often than the "run of the mill" transaction.
Good luck with your home search.
Brian Luce - ABR
Weidel Realtors - Doylestown
215-348-5600 x 122
Here is a blog I posted on the subject: http://activerain.com/blogsview/1437935/fha-203k-or-fannie-m
I have an FHA loan program where you can finance 96.5% of the purchase price, some of the closing costs and all of the costs to renovate the property. Itâ€™s a great program for first time homebuyers looking to buy a fixer upper and right now the rate is 5.5%.