If your idea of the perfect house is one that needs some tender loving care, you are probably concerned about the cost. Unless you know about 203k rehab loans Seattle lenders offer, you probably assume you will have to get two loans. You've got to have one to buy the house and another to fix it up. Fortunately, you may qualify for the 203k option. This way you could get both loans wrapped into one monthly payment.
There are two types of 203ks. The lender will probably refer to them as standard and streamline. Standard is for major construction and structural repairs. These are the kinds of renovations that require the homeowner to move out of the house while the work is being done.
A streamline loan is for less drastic renovations that are mainly cosmetic. You can get up to thirty-five thousand dollars. Before remodeling can start, an appraiser must inspect the property and list the required and requested repairs, that are on FHA's approved list. A contractor bids on the job, and the lender either accepts or rejects the proposed repairs.
You don't get the money for the repairs. Half on the approved amount goes to the contractor, and the other half is put into escrow. Once the work is completed, the contractor receives the remainder in escrow, and the escrow account is closed out. The buyer has one mortgage payment that covers the purchase and the repairs.
The FHA will only approve certain repairs with the streamline 203k. It will cover the cost of repairing or replacing roofs, downspouts and gutters, replacement of exterior siding, accessibility improvements, electrical and plumbing systems, and door and window replacement. You can't install a new heat and air system using the loan money, but repairing an existing system is allowed.
Stabilizing lead based paint and removing asbestos is on the list. If you are buying a house outside the city limits that has a faulty septic tank system, you can use the money to have that repaired. You can have the kitchen remodeled, including new appliances, as well as redoing bathrooms. You can renovate or refinish a basement, but you can not do anything structural to it. The loan will cover paint, termite damage repair, and mold abatement.
You have to be careful with the maximum amount of thirty-five thousand dollars, because other expenses will come out of it before the repair costs. These expenses include two inspections to make sure the contractor is meeting FHA standards. You will have to pay for a title update fee which protects the lender in case the contractor places liens against the property.
A contingency reserve of 10 to 20 percent is set aside for cost overruns. A supplemental origination fee will be charged for the escrow account set up and oversight. If these parameters fit your renovation project, then a 203K may be just what you need.
There are two types of 203ks. The lender will probably refer to them as standard and streamline. Standard is for major construction and structural repairs. These are the kinds of renovations that require the homeowner to move out of the house while the work is being done.
A streamline loan is for less drastic renovations that are mainly cosmetic. You can get up to thirty-five thousand dollars. Before remodeling can start, an appraiser must inspect the property and list the required and requested repairs, that are on FHA's approved list. A contractor bids on the job, and the lender either accepts or rejects the proposed repairs.
You don't get the money for the repairs. Half on the approved amount goes to the contractor, and the other half is put into escrow. Once the work is completed, the contractor receives the remainder in escrow, and the escrow account is closed out. The buyer has one mortgage payment that covers the purchase and the repairs.
The FHA will only approve certain repairs with the streamline 203k. It will cover the cost of repairing or replacing roofs, downspouts and gutters, replacement of exterior siding, accessibility improvements, electrical and plumbing systems, and door and window replacement. You can't install a new heat and air system using the loan money, but repairing an existing system is allowed.
Stabilizing lead based paint and removing asbestos is on the list. If you are buying a house outside the city limits that has a faulty septic tank system, you can use the money to have that repaired. You can have the kitchen remodeled, including new appliances, as well as redoing bathrooms. You can renovate or refinish a basement, but you can not do anything structural to it. The loan will cover paint, termite damage repair, and mold abatement.
You have to be careful with the maximum amount of thirty-five thousand dollars, because other expenses will come out of it before the repair costs. These expenses include two inspections to make sure the contractor is meeting FHA standards. You will have to pay for a title update fee which protects the lender in case the contractor places liens against the property.
A contingency reserve of 10 to 20 percent is set aside for cost overruns. A supplemental origination fee will be charged for the escrow account set up and oversight. If these parameters fit your renovation project, then a 203K may be just what you need.
About the Author:
You can find an overview of the benefits and advantages of taking out rehab loans Seattle companies offer at http://www.privatecapitalnw.com/fix-and-flip-rehab-loans right now.
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