Turn a foreclosure nightmare into your dream home with a 203K loan

This week Rich and Steve were in studio talking about 203k rehab loans. Unless you have unlimited resources, a great vision and a top notch builder at your disposal, you probably will probably never find the perfect house. Today there are lots of properties on the market with deferred maintenance or trashed by formers owners angry over foreclosure. If you are thinking about buying such a property, using a 203k rehab loan might make sense for you. An FHA 203k loan lets you to borrow enough to finance a home including the funds needed to make those improvements.   You will pay a little premium and the application process is a little longer, but since the loan is guaranteed by FHA, the rates are still very attractive. The loan can also include a 10-20% reserve for expenses above and beyond your estimates. You can get up to six months' worth of mortgage payments included to cover the mortgage while you're renovating the home, so that you won't have to make a double housing payment. There are two types of 203k mortgages: regular and streamlined Regular 203k for properties that need structural repairs; streamlined for those that need only non-structural repairs. For the regular 203k loan, the maximum amount borrowed   is based on the lesser of the as-is value of the property plus rehab costs or 110% of the expected value of the property after   the rehab. The streamlined loan allows home buyers to add a maximum of $35,000 to the purchase price to pay for improvements. Right now, only owner occupants can take advantage of a 203k loan, although there is a strong lobby for opening them up to investors to help get through the foreclosure inventory Single-family to four-family dwellings, and FHA approved condos all qualify for the loan, even rehabbing the residential portion of a mixed use property can be approved, so whatever your dream home might be, don’t let the repair costs deter you. This Week’s Real Estate Insight: The 203k loan is a complex process, make sure you research the process and are working with a lender like Steve Tetzner who has experience in getting them to closing, the last thing you need is for the lender to drop the ball on you.