What is a FHA 203k loan?
The FHA 203k renovation loan program provides funds for
both the purchase and renovation of a home packaged into one mortgage loan. Once the purchase of the home is closed, renovation funds are held in escrow to pay for pre-determined renovation work done by approved renovation contractors.
The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased.
HUD's 203(k) program can help you overcome this obstacle by enabling you to borrow funds for the purchase or refinance of a property plus the cost of making the repairs and improvements in one mortgage. The FHA-insured 203(k) loan is provided through approved lenders nationwide and is available to owners who will
occupy the home themselves.
Down payment, credit qualification, loan limits and other requirements are
the same as standard FHA loans. Additional guidelines are set forth specific to
203k loans to provide for renovation of the home.
both the purchase and renovation of a home packaged into one mortgage loan. Once the purchase of the home is closed, renovation funds are held in escrow to pay for pre-determined renovation work done by approved renovation contractors.
The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased.
HUD's 203(k) program can help you overcome this obstacle by enabling you to borrow funds for the purchase or refinance of a property plus the cost of making the repairs and improvements in one mortgage. The FHA-insured 203(k) loan is provided through approved lenders nationwide and is available to owners who will
occupy the home themselves.
Down payment, credit qualification, loan limits and other requirements are
the same as standard FHA loans. Additional guidelines are set forth specific to
203k loans to provide for renovation of the home.
Highlights
The FHA 203k loan programs are both the most exciting loan programs available right now as well as the most misunderstood by both buyers and Realtors alike. Imagine a loan program that allows you to make that house that is almost perfect for you to BE PERFECT for you! Maybe you would like new granite counter tops, or the bathrooms all updated. Maybe you want all new stainless steel appliances. Perhaps you want new carpet, hardwood flooring or tile. Maybe the home just needs a new roof or siding. Maybe you don't like the color of the paint in the house, or you need new windows. In the past you would either need to continue you home search or pay for the repairs/renovations out of pocket. With this loan program you can go to each home showing with the confidence that if the house is not perfect (and they RARELY are), you can secure financing that will make the house your perfect home!
So what's the catch right? This is no catch. It is underwritten just like and other FHA loan. You have the same minimum credit scores for FHA, the same great government backed low interest rates, and the same relaxed income ratios. Its the easiest loan in the country to get approved for! It is a must consideration for any 1st time home buyer.
So what's the catch right? This is no catch. It is underwritten just like and other FHA loan. You have the same minimum credit scores for FHA, the same great government backed low interest rates, and the same relaxed income ratios. Its the easiest loan in the country to get approved for! It is a must consideration for any 1st time home buyer.
FHA 203K lender
This is the single most important part of the 203k loan process. Selecting the right lender. So what should you look for? One of the most common misunderstandings about this program by both Realtors and Buyers alike is that this program takes forever to do and is immensely complicated. It will frustrate the seller and that you will need multiple contract extensions.
This can be true if you select the wrong lender for this program. First off, you want to work directly with the lender. This means NO BROKERING. A broker for this program will just be a middle man 3rd wheel. They do nothing but find the bank, submit it and collect a check. This means when you have a question you have to ask the broker, they will in turn have to ask the lender. A lot gets lost in translation. Second, you want to work with a lender that plans on servicing the mortgage. This means you will make your mortgage payment directly to the company that is going to approve and fund the loan. This is important for a number of reasons. They make the final decision on your loan. They are not underwriting and approving this with the intent on selling it right away. That means they are not putting extra conditions on the loan, because that's what the purchasing bank wants. Also when you are dealing with both the approving lender and servicer, you will get better rates and lower overall closing costs. They are not reliant on selling the loan to make money. They make their money while servicing your loan at the interest rate agreed upon. Maybe the most important reason of all is speed! The length of time it takes from start to finish. This can affect your interest rate, and possibly the home itself if the purchase contract expires and the seller is unwilling to extend. This 203k program is not available at most retail banks. They have extremely long delays on conventional financing, let alone a rehab program. They just can't get them done in time and plus their rates are going to be retail with all the bank overhead calculated in with every transaction.
A wholesale mortgage lender and servicer is what you want not only for this loan program, but any loan program. You want a lender that ONLY services mortgages. This will dramatically cut down on overhead, speed up the lending process and ensure you the lowest rate, closing costs, and best knowledge of the loan program itself.
Click here for the best 203k lender in Ohio.
This can be true if you select the wrong lender for this program. First off, you want to work directly with the lender. This means NO BROKERING. A broker for this program will just be a middle man 3rd wheel. They do nothing but find the bank, submit it and collect a check. This means when you have a question you have to ask the broker, they will in turn have to ask the lender. A lot gets lost in translation. Second, you want to work with a lender that plans on servicing the mortgage. This means you will make your mortgage payment directly to the company that is going to approve and fund the loan. This is important for a number of reasons. They make the final decision on your loan. They are not underwriting and approving this with the intent on selling it right away. That means they are not putting extra conditions on the loan, because that's what the purchasing bank wants. Also when you are dealing with both the approving lender and servicer, you will get better rates and lower overall closing costs. They are not reliant on selling the loan to make money. They make their money while servicing your loan at the interest rate agreed upon. Maybe the most important reason of all is speed! The length of time it takes from start to finish. This can affect your interest rate, and possibly the home itself if the purchase contract expires and the seller is unwilling to extend. This 203k program is not available at most retail banks. They have extremely long delays on conventional financing, let alone a rehab program. They just can't get them done in time and plus their rates are going to be retail with all the bank overhead calculated in with every transaction.
A wholesale mortgage lender and servicer is what you want not only for this loan program, but any loan program. You want a lender that ONLY services mortgages. This will dramatically cut down on overhead, speed up the lending process and ensure you the lowest rate, closing costs, and best knowledge of the loan program itself.
Click here for the best 203k lender in Ohio.
Brian Dawson
FHA 203K Specialist NMLS # 142285 Ohio License # OH LO.035696.000 614-721-8602-Office 614-824-9647-Cell 614-448-4792-Fax [email protected] |