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Birdsong Lane Bokeelia Florida Listed at $99,990
REO Loans - HUD 203K OK so the 203K loan program, what is it?
It is a loan program designed to allow the costs of repairs and renovations to be added to the purchase price of a property, and thus incorporated into the mortgage. This is especially beneficial with regard to the thousands of distressed properties on the market today.
A home buyer finds a particular location they would like to live in. They would then talk with their lender and appraiser to decide what repairs and renovations and upgrades could be done to the property and still make the loan feasible.The primary reason for the appraiser to be involved is the value added to the appraisal via the repairs and upgrades.For instance, renovating an entire kitchen, cabinets and all, could affect the homes appraised value by thousands, and thus be incorporated into the loan program.The homeowner would need to locate a contractor to aid them in the estimating process of the repairs. Once it is all agreed to, the contractor's proposal is part of the loan documents, and the lender agrees to lend at the remodeled rate, with the cost of repairs included in the purchase.The contractor typical gets a draw schedule from the lender that incorporates a large percentage upon mobilizing to cover ll materials, and subsequent draws for progress payments, until complete with the work.
What homes qualify:
"To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.
Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place.
In addition to typical home rehabilitation projects, this program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.
An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.
A 203(k) mortgage may be originated on a "mixed use" residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property." www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm So here are some resources to help you understand what and how this all works:http://www.fhainfo.com/fha203k.htm http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
