Rethinking FHA 203K
Thanks to this blog, I have found something of great value! I have found a lender who really knows his way around FHA loans. Robert Summers does FHA 203K loans (those are the ones with repair funds built in) and he does them successfully. He commented when I wrote about FHA 203K a few weeks ago.
I asked him what the most important benefits of are for borrowers:
1. Allows borrowers to keep personal cash by rolling the cost of the repairs into the loan. This is a much-overlooked part of the home buying process. Many buyers get into trouble by neglecting to hold reserve for repairs and life’s setbacks.
2. Easy and Convenient. The repairs are figured into the original loan balance, making it one loan.
3. Can be used with either a purchase or refinance.
4. Can be used to purchase Energy Efficient appliances, for insulation, for solar panels, for hardwood flooring, or landscaping.
5. FHA Streamline K allows a buyer to get into the kind of home that will be turned down for conventional financing. Think: home with a gutted kitchen or bathroom.
These loans are for properties that are fully built and at least 1 yr old (or that old by closing.)
This program is pretty flexible. And now that the streamline program is in place, the process promises to be less painful. Does this change your opinion of the FHA 203K program?
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I've always had a positive opinion of this program, but unfortunately, it does not help lower the cost of homes with gutted kitchens into the "affordable" category.
As long as borrowers are *fully aware* of the amount of time and paperwork required, I still think they are great loans.
I am actually going through the process now and will be sure to let you know how it goes.
Anthony, hope you do write to Rona/Scott about how it goes - this is an appealing idea for those who might be inclined to hunt for an older home which needs work rather than a less-interesting house that may have already been renovated, etc.
I did a 203(k) on a foreclosure last year that needed some work. The two worst parts: massive, constantly changing paperwork that delayed closing multiple times (original closing pushed back several months) AND being forced to lock in a contractor up front before we'd even bought the house. We wanted to fire our contractor after about 6 weeks but were told we couldn't--made for an incredibly stressful rehab.
The process only works well if you get a really great contractor up front, i.e., you have a family member oclose friend working on it for you.
The problem with a relative is that's not allowed under HUD guidelines.
Did the consultant help you in any way with the contractor. A good consultant is the key to the program.
Gary Smith
203K Consultant
www.garynsmith.net/203k
This blogger might want to review your comment before posting it.
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