Artery Remodeling
Artery Remodeling, renovating homes and offices in Maryland, DC and Northern Virginia
Artery Remodeling
203k- Your First Destination for Financing Your Home Remodel
There is a lot of people thinking “ only If I had a wad of cash under my mattrass” I could do those home remodeling projects on the honey-do list. Well do I have a plan for you, If you already own a home that needs repair, most lenders will not let you refinance until all the needed work is completed. However, you need the money as the work is being done. The Department of Housing and Urban Development (HUD) designed the 203(k) Loan Program to help rehabilitate the nation’s existing housing inventory and to give families an opportunity to purchase and rehab a property as a primary residence.
In a case where your home doesn't need repair, but you wish to do some modernization or renovation, many people choose the 203K. The FHA 203K loan is the only loan that allows us to appraise your home as if all renovation projects are completed.
For example, let's say your home is worth $100,000, and you owe $80,000. You want to build a sunroom that costs $30,000. Most lenders will only let you borrow $20,000 - or even less!
But under an FHA 203K loan guildlines, our loan professionals will ask the appraiser to let us know what your home is worth after the room is added. Using the example above, it should be worth at least $130,000. We can now lend you even more than the $30,000 if you need it (and you probably will, for all the extras!).
Take a look at some notes I took regarding requirements and eligibility from our loan professionals. These are some I found helpful:
FHA 203k General Requirement Notes:
· Higher level of supervision of homeowner than other programs
· Loan amount based on Completed Value but capped at FHA maximum mortgage limits in your county. *adjusted annually
· Very low minimum down payment (credit pending)
· Relaxed credit and Income qualifying guidelines
· Some limits on types of repairs
· Investors (non-owner occupied) prohibited
· Fixed or Adjustable rates (ARM’s) available
· Can be combined with FHA’s Officer Next Door and Teacher Next Door home ownership programs.
· Can finance up to six months of mortgage payments for owner-occupied properties to cover non-occupancy costs during construction. For example, if you have to spend six months renting an apartment while your home renovation takes place, you can roll those expenses into your loan amount.
· Owner Occupied- You must live in the property for a minimum of three years after the rehabilitation is complete.
· Minimum Level of Rehab - Want to know if your project qualifies? Request a free estimate from New City and include information on the type of property you are looking to rehab and its current condition.
· Mortgage Limitation - You may only have 4 total mortgages in your name, including your 203(k) mortgage.
· Property Standards - You must comply with HUD’s minimum property standards.
· Loan to Value - The loan to value cannot exceed 100% of appraised value of the property after construction is completed.
Common Question: I presently own a single story Ranch home, can I add a complete second story addition and a garage? Yes, your new Colonial will be worth a great deal more than just the cost investment
Keep in mind, the following costs can also be included, and not considered to be luxury Items :
· New free standing range, refrigerator, washer and dryer, trash compactor and other appurtenances. (Used appliances are not eligible
· Interior and exterior painting.
· The repair of a swimming pool, not to exceed $1,500.
· Repair costs exceeding the $1,500 limit must be paid into the contingency reserve fund by the borrower.
· The installation of a new swimming pool is not allowed.
Luxury items and home improvements that do not become a permanent part of the real property are not eligible as a cost of rehabilitation. The items listed below (not limited to this list) are not acceptable under the 203(k) program, including the repair of any of the following: Barbecue pit; bathhouse; dumbwaiter; exterior hot tub; sauna, spa and whirlpool bath; outdoor fireplace or hearth; photo mural; installation of a new swimming pool; gazebo; television antenna; satellite dish; tennis court; tree surgery. Additions or alterations to provide for commercial use are not eligible.
The HUD 203K process is unique; many remodelers are not set-up to handle these kinds of projects. The HUD 203k Loan requires detailed estimates, a strict bank-approval process for contractors, extensive planning and scheduling, and up-front costs that must be covered by the remodeling contractor. With your home's quality on the line and carrying costs accruing during construction, you want a sales professional that has experience to bring the required team together.
Are you ready to discuss your project with a 203k loan officer? Let me help guild you through the process!!
Jim
(240) 315 5785
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