203k Loan Northwest GA Real Estate
Create your own DREAM HOME with a FHA 203K Serving Northwest Georgia.
FHA 203K Rehab & Renovation Loans offer everything you could want for that home needing a little TLC. Whether it is that fantastic foreclosure deal, adding that new deck, getting rid of that shag carpet, saving the purchase deal that the bank turned down due to property condition or making that simple change that turns an ordinary home into your dream home; FHA 203K & Fannie Mae Rehab / Renovation Loans can help you.
How Do FHA 203K Loans Differ from Traditional FHA Loans?
Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made. In the current market many of the numerous foreclosures sit on the market in disrepair due to vandals, theft and neglect. To lenders of traditional loans those properties are considered poor collateral that they’d prefer not to lend on. However, for FHA 203K loans the loan is based on after repair value and includes an escrow account to complete the repairs needed to bring the house to a condition that lenders prefer. That means that the current condition of the property is not as important on 203K rehab loans as the condition of the property once the 203K renovation is complete. This provides an outlet to purchase dilapidated properties, many of which have spent extended periods on the market due to the lack of availability to traditional financing, and solves the problem that most lenders face when dealing with property in disrepair. What this means to the home buyer is generally a significant discount to “as-is” value and, quite often, a fantastic deal on a house.
How Can FHA 203K Loans Be Used?
FHA 203K renovation loans are used in three different ways:
1. To purchase an existing home (and the land attached to that home) to renovate it. Does MY Purchase Qualify for FHA 203K?
The eligible improvements allowed on FHA 203K loans are numerous and extensive. About the only thing HUD frowns on are luxury improvements that are not going to be a permanent piece of the property. Here are just a few of the common and not so common things FHA 203K borrowers use the versatile rehab loan for:
1. New freestanding appliances
2. Bathroom remodels
3. Master bedroom remodel
4. Upgrading HVAC
5. Adding energy efficient improvements
6. Wells and septic repair and upgrades
7. New siding
8. Interior painting
9. Exterior painting
10. Attic build-outs
11. Waterproofing the basement
12. Creating a media room
13. Adding a 2nd floor
14. Total renovations
15. Finishing the basement
16. Bedroom additions
17. Neck deck / patios
18. New hardwood flooring
19. New doors and windows
20. Upgrading plumbing and electrical
21. Opening up the floorplan
22. New granite countertops
23. Vaulting the ceilings
24. Going GREEN!
25. New fixtures for bathtubs, sinks and kitchens
26. Making a house handicap accessible
27. Getting a condo or house ready for a new college student
28. Solar panels
29. Low flow toilets and shower heads
30. Creating a new master bedroom area
31. Entire Roof Replacement
32. Energy efficient items such as new Attic Insulation
What is the FHA 203K Loan Process Like?
One of the biggest misconceptions about the FHA 203K loan process is that it is hard and time consuming. It is only hard if your loan officer is inexperienced with the process. As far as being time consuming, whenever you involve third parties like architects and contractors you increase the amount of time a loan takes to close. However, on most renovations there is no reason the process cannot be completed in 45 days from start to closing. This is especially true on the 203K Streamline which doesn't involve HUD 203K Consultants or architects. To get a true understanding of the process you need to understand there are two different kinds of FHA 203K loans:
The easiest and quickest version is the FHA 203K Streamline. This loan is for repairs under $35,000 that do not involve any kind of structural renovations. For Streamline FHA 203K’s you will have two draws. Generally, the lender will release 35-50% upfront and 50% when the work is completed. On most of these the lender will require a final inspection to make sure the work is complete, but on some of the simpler 203K rehabs you can provide receipts showing materials have been purchased and that will be sufficient.
On the full FHA 203K, loans exceeding $35,000 or involving structural repairs, the process becomes slightly more complicated. Many times on these when you are doing more extensive repair you will need to involve an architect and get architectural drawings so the contractor bids and appraisal are accurate. You will also be required to have a HUD approved 203K consultant that will help determine repairs and administer draws. On the full FHA 203K loans the process often looks like this:
1. Contact lender for pre-approval
2. Locate property & make offer — offer should indicate loan is a FHA 203K & include basic FHA disclosures**
3. Offer accepted
4. Loan submission & underwriting
5. FHA 203K consultancy
6. Architectural drawings (in needed)
7. Contractor bids & contractor selection
9. HUD Consultant inspection
10. Underwriting conditions cleared
11. Loan closing
12. Repair begins
13. Final inspection / Title Closeout
Obviously, the process can vary from loan to loan and will often be simpler on the FHA 203K Streamline because the consultant and architect are not needed, but the basic 203K financing process remains the same.
End Result of the 203K Process
The end result of any process can rarely be guaranteed, but when done correctly a 203K purchase loan with an experienced loan officer and knowledgeable Realtor home buyers can successfully use a 203K financing to create a custom designed home with substantial equity from day one. They can use this loan, especially in this market, to solidify their future and create personal wealth. On a 203K refinance home buyers can successfully fix those little nagging problems around the house and make those upgrades they have talked about for years. They can do so all in a low fixed rate government backed mortgage. If done correctly FHA 203K loans are one of the absolute best and most useful loan products on the market.
Click on the FHA 203K REHAB ASSISTANT and get started on your 203K Financing today.