are thinking about buying a fixer-upper, but worried about coming up with the money to pay for the cost of construction? Or you want to renew your existing home, but just do not have available time or money? If so, FHA May have a program to solve your problema.Odjeljak 203 (k) Program managed by FHA provides funds for future and current homeowners to make repairs and / or do renoviranja.203 (k) loan combines a home's purchase price and all costs repairs in an FHA mortgage, with only 3.5% down payment.
A growing number of people who are taking advantage of this program, a reflection of the large housing inventory caused, in large part, by foreclosures resulting from the recent economic krize.FHA reports that the number of 203 (k) loans in 2008 almost doubled compared the previous year, with 2009 experiencing a 40% increase from last year. Potential homebuyers, attracted by the relatively low market prices on foreclosed properties are often left to think about how (and when!) They are going to be able to pay for the repairs after buying the house. It is not uncommon scenario of a closed homes, which are often left abandoned, usually require extensive popravke.203 (k) loan program solves this problem by enabling homebuyers to finance the construction and start repairs on the house immediately after the closing credits. All residential property, not just closed homes, potential candidates for 203 (k) loan program.
What is the FHA 203 (k) program?
FHA 203 (k) Program is a home rehabilitation and repair program designed to revitalize neighborhoods and encourage homeownership. It can be used by people who are looking to buy a new home or existing home or looking to make the repair works on the current home. What do consumers end up with an FHA insured mortgage - the amount of loans consisting of home in the purchase price (or the current balance in the case of existing homeowner) plus estimated costs of construction
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Normally, someone buying a home that is in need of repair must first obtain interim financing for the rehab repairs, then additional financing to purchase a home. In this scenario - after repairs are complete then the homeowner must have a new mortgage to combine the two loans. With 203 (k) program, on the other hand, a borrower only needs to obtain a mortgage, which covers the purchase of houses and property rehabilitation.
203 (k) program comes in two flavors, a standard version and a more modern version. In addition to the standard program, construction costs must be at least 35,000 dolara.Maksimalni construction costs are limited to only measure the "as-improved" value of the home (ie the value the assessor estimates the property will be after the repairs / renovation was finished). All FHA mortgage, with or without 203 (k) loan, subject to the mortgage granice.Iznos mortgages can range from $ 271,050 to 729,750 U.S. dollars, depending on where the home buyer nalazi.Ukupni amount of the mortgage, which will include any cost of repairs, not to exceed 110% "as-improved" home vrijednost.Aerodinamično 203 (k) program is used for situations in which construction costs were under $ 35,000.
To be eligible, properties must be the one to four family structures that are at least a year old. Condominiums can qualify, even though there are some additional restrictions and limitations. In addition, the FHA allows "mixed use" properties (ie properties with both residential and commercial use) to qualify for the program.
is a partial list of what you could use the 203 (k) loan to cover, replace the roof, add a room, a kitchen or bathroom remodel, landscaping, updating equipment, repair of termite or water damage, electrical upgrade and / or HVAC systems . It is also important to note that the program requires some repairs (if necessary) to be made. These repairs must deal specifically with what the energy efficiency of the property to code.
con-a
FHA 203 (k) loan does not come without some additional costs and other potentially negative factors. Consumers should carefully weigh the pros and cons to decide whether this program is right for them.
A homebuyer will occur outside the normal fees and mortgage closing troškove.Dodatni granting of benefits - which is in excess of $ 350 or 1.5% of the mortgage that is used for rehab purposes - is required. In addition, the compensation consultant (approved HUD) must visit the site prior to assessment to ensure compliance with program requirements. Expect to pay $ 100 - $ 200 for this service.
o takes longer to close on a mortgage loan - up to 4 weeks longs than normal conventional mortgage
the need to use an FHA approved lender. Although many of these lenders are-not all lenders will participate in 203 (k) program.
May about some lenders prefer to deal with the home buyer who is able to pay cash for the home (compared to someone with 203 (k) program) to obtain faster turnaround loan closing.
o Expect more paperwork than a normal conventional or FHA loan
Pro
o Access to resources to complete the repair and / or restoration
o Convenience - homebuyer can not find separate funding for construction, and construction began immediately after the closing credits
Speed of construction - the process of completion is usually faster than if the homeowner is to run updates on their own
about 3.5% down payment - conventional mortgage usually call for 10-20% down payment.
o The ability to finance up to six monthly mortgage payments.
203 (k) loan process step by step
203 (k) process is more paperwork and steps one would experience in a conventional mortgage proces.Koraci are as follows:
- finds a home loan for the purchase and repair / rehab (or wants to repair / rehab current residence)
- of the Borrower and their real estate agent within the preliminary feasibility analysis to determine how much work is needed, with an approximate estimate of the costs and the expected market value of the house after all work is completed
- purchase contract is executed
- borrower selects and works with an FHA approved lender
- loan, an entrepreneur, a FHA approved consultant meet at the property to determine the "required" vs. "desired" to improve
- Compensation Advisor prepares a write-up
- home buyer request the contractor for bidding - and then selects the contractor
- gives the lender a plan to build for an FHA-approved appraiser to determine the "as-improved" value
- lender determines the maximum amount of the mortgage provides for Property on the basis of "as-improved" value of assets
- loan was guaranteed by the lender, if the approved lender issues "firm commitment" and the loan closing is scheduled for
- loan was closed. Funds were allocated in escrow račune.Kredit FHA loan is secured after closing
- starts working. Contractors are paid in draws as a compensation consultant to FHA approved each phase of completed work. The homeowner has six months in which to complete the entire job
- After the work is completed - and the borrower states that all works are completed to their satisfaction, HUD inspector performs a final check. If the scan shows the right - the lender pays the remaining draw on ugovor.Zadnjih 10% can be maintained up to 35 days to ensure no liens have been placed on the property
It should be clear that the FHA 203 (k) program offers a viable solution for some home buyers who are looking for funds for home repairs and restoration. Every individual should take into account the pro and con, and apply it to your unique situation.