What Improvements Can You Make with a FHA 203K Loan For?

March 2, 2009 by Leave a Comment

renovate homes!FHA has a great program to help with renovating a new home!  It’s called the 203K program - and if you’ve been on Craigslist, you’ve definately seen, “this property is eligable for FHA 203k loan!”

It’s a great program for making up to $35,000 of improvements to the home.  Many time, foreclosed property has what Realtors refer to as “Deferred Maintenance.”  This means that people who could not afford to make their house payment – also could not afford to have the termite / wood rot repaired, or the stove fixed, or the carpet replaced… So this loan is PERFECT for those kinds of updates!

What items can you update – and which ones can you NOT do with this loan?  Here are some basic guidelines:

Eligible Improvements/Work

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/upgrade of existing HVAC systems
  • Repair/Replacement/upgrade of plumbing and electrical systems
  • Repair/Replacement of flooring
  • Minor Remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior
  • Weatherization, including storm windows and doors, insulation, weather
  • stripping, etc.
  • Purchase and installation of appliances, including free-standing ranges,
  • refrigerators, washers/dryers, dishwashers and microwave ovens
  • Accessibility improvements for persons with disabilities
  • Repair/Replace/add exterior decks, patios, porches
  • Basement finishing and remodeling, which does not involve structural repairs
  • Basement waterproofing, including mold removal
  • Window and door replacements and exterior wall re-siding
  • Septic system and/or well repair or replacement
  • Connection to public water or sewage system

Ineligible Improvements/Work

  • Major rehabilitation or major remodeling, such as the relocation of a wall
  • New construction (including room additions)
  • Repair of structural damage
  • Repairs requiring detailed drawings, plans or architectural exhibits
  • Landscaping or similar site amenity improvements, including fence
  • Lead-based paint stabilization or abatement of lead-based paint hazards
  • Any repair or improvement requiring a work schedule longer than three (3) months; or Rehabilitation activities that require more than two (2) draws/payments.
  • Any work requiring a plan reviewer
  • Result in work not starting within 30 days after loan closing; or cause the borrower to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted (FHA anticipates that, in a typical case, the borrower would be able to occupy the property after the mortgage closing.

REMEMBER!  If you are a First Time HomeBuyer, you might qualify for a $8000 tax credit (that you don’t have to pay back!)!  Click Here for more details!

Many loan officers do not offer this program, and are not familiar with the process.  Please call Steve and Eleanor Thorne, Corporate Investors Mortgage Group in Cary, NC for details!  919-649-5058

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FHA 203K Loans in NC

February 16, 2009 by 2 Comments

FHA 203K loans are perfect for those of us who fall in love with a greatThe Green Shag has to GO! house that has this Gosh Awful Shag Carpet!  This carpet would give you a headache!  How can you buy the house if you don’t have an extra $5000 to update that 1970′s carpet, green countertops, and linoleum?  If the property is under the FHA loan limit in your county, you can purchase it with a FHA 203K loan.

Let’s say you negotiate a sales price of $100,000.  With a traditional FHA mortgage loan, you would need to put 3.5% of the $100,000 into the downpayment.  With this special FHA mortgage program, designed for REHABS, you can add up to $35,000 for “updates.”  This means that if you negotiate a price of $100,000 and you need an additional $5000 for the updates…  we base the 3.5% downpayment on $105,000!

It’s a GREAT program for folks who need to update a property!  The main things to remember are:

  • You can add a minimum of $5000 to the purchase price for improvements, including appliances.
  • You can not change the “footprint” of the house.
  • You can not borrow more than $35,000 for improvements.
  • The property must appraise for the improvements plus the purchase price, or “after improvement” value.
  • Qualifying is the same as with traditional FHA loans, so you need to have at least 2 credit scores above 600.
  • The after improvement value can not exceed the maximum loan amount for your county.
  • The checks for improvement will be going directly to the entity doing the work, only in RARE occassions will this be the homebuyer.
  • Great loans for folks purchasing foreclosed property!
  • FHA is not a loan for Investors, with the exception of those purchasing a HUD foreclosed property – when HUD allows an FHA mortgage as part of the contract.

If you have questions about a 203K loan in NC, please contact Steve and Eleanor Thorne at Corporate Investors Mortgage Group, Inc  919-649-5058.

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Purchasing FHA Foreclosures

June 16, 2008 by 4 Comments

FHA is making a temporary move which will make it easier for folks who want to purchase FHA foreclosures.  In a release last week HUD announced that it will temporarily waive a 90 day restriction it held on those selling HUD foreclosed property. 

The restriction had been in place to reduce ”flips” a fraudulent practice that strips a home of its equity before being quickly resold at an inflated price.  Under most circumstances, the resale is to an unsuspecting buyer, especially if that buyer is not represented by a licensed Realtor.

In their statement, HUD said:

“In an effort to stabilize declining home values in certain neighborhoods.. announced a temporary policy that will… allow for the immediate sale of vacant foreclosed properties.

For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.”

Hud further stated, “that many foreclosed properties remain vacant for months, inviting vandalism and reducing values of surrounding homes. To address that sizeable inventory, lenders have hired companies that specialize in the marketing and disposition of foreclosed homes. It’s reasonable and appropriate that these firms have the ability to sell the properties to borrowers using FHA financing.”

We normally recommend FHA 203k financinging for these properties!  For more information – please follow this link.  If you have questions about qualifying for one of these properties, please contact Steve and Eleanor Thorne  at Corporate Investors Mortgage Group in Raleigh, NC 919-649-5058

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Firefighters Qualify for 50% Discount

April 24, 2008 by 2 Comments

fire figherAnd it’s not just firefighters!  Public School Teachers and Policemen also qualify for this unique FHA Program!

According to the new “Community Neighbor Program” County employees willing to purchase a HUD owned property can purchase that property for 1/2 of the sales price.  So, a $138,000 property just became affordable at $69,000!

Many of these properties also qualify for special “rehabilitation financing vehicles!” (FHA 203K loan program)

In the Triangle there are currently over 25 properties that qualify for this program! Call Steve and Eleanor Thorne at Corporate Investors Mortgage Group in Raleigh, NC for more FHA special loan program details!  919-649-5058

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FHA Repair Requirements

April 14, 2008 by 4 Comments

FHA Repair requirementsHomebuyers are looking for a deal – and sometimes you might think that purchasing a “fixer-upper” might be the best way to go!

The problem is that many sellers, including banks holding foreclosed property, might not want to accept an FHA borrower? Why?  Because FHA will not take a property with a paint job like the one shown here.  If you were purchasing this property, the exterior repairs would need to be done PRIOR to closing.

Most homebuyers do not want to sink money into a property they haven’t purchased yet – leaving the repairs for the seller (who often doesn’t have a ton of cash on hand, ergo this is why they are selling!).

fha loans cary

FHA did make some moves earlier this year that lead some to believe that it’s EASIER to get financing with FHA on an existing home… and indeed, if you are purchasing a home in fairly good shape the appraisal process is easier!  Look through this list with your realtor and we believe that you will agree that a Seller of a property in reasonable repair should accept a contract with FHA financing for the borrower.

Examples of MINOR property conditions that no longer require AUTOMATIC repair for existing properties are:

  • Examples of Missing handrails;
  • Cracked or damaged exit doors;
  • Cracked window glass;
  • Minor plumbing leaks (such as leaky faucets);
  • Defective floor finish or covering (badly soiled carpeting);
  • Rotten or worn out counter tops;
  • Crawl Space with debris or trash;
  • Defective paint surfaces in homes constructed Post 1978

Examples of tests that may no longer be REQUIRED:

  • Wood Destroying Infestation Report-required if there is evidence of READILY OBSERVABLE ACTIVE infestation;
  • Well (Individual Water Test)-Required if there is knowledge that well water may be near sources of contamination;
  • Septic Test-required if evidence of system failure.

Don’t be confused when you hear stuff about FHA being a bad program!  Get the FACTS!  You MIGHT need an FHA 203K home improvement loan – ask us for details!

For more information on FHA MORTGAGES, contact Steve and Eleanor Thorne, The FHA EXPERT in NC at Corporate Investors Mortgage Group, Inc 919-649-5058

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