The FHA 203K loan has been around since the 1970’s however the reason why you don’t hear about a lot of them being done, is either the borrower is aligned with an in-experienced loan officer, who does not want to take on the challenge of additional work and time to close, or you just don’t know about it.
Here is how it works, and you can either do a PURCHASE or REFINANCE with this loan.
You can roll in the comprehensive repairs to be completed by a general contractor and subs into your loan amount. Simple as that.
Integrated remodeling of a room, area, or entire home with multiple jobs being coordinated by one contractor. Want to add a bedroom, bathroom, or any additional square footage, a deck, a new kitchen, can all be rolled into the interest rate, which now is between 4.875%-5.625%. Amazing. LOW! RATES!
So here is an example... The buyer is purchasing a home with foundation issues, and a bunch of other problems for $290,000
The FHA HUD Consultant estimates the repaired to be around $110,000, so the new loan amount, which has to abide by FHA County Limits, is maxed at $406,250.
The cost per square foot in this particular area of Denver is a little over $210. The property is 2800 sq ft. That will justify an after appraised value of $588,000. WOW!
Even if the buyer wanted to sell the property in six months, he will have an amazing profit of over $180,000!
With rising interest rates looming on the horizon, it is a safe bet that refinancing activity will be diminishing over the next couple of years. In addition, many strongly believe, including myself, that in some pockets of Colorado, there is no strong bottom on this market. Foreclosures are prevalent, and this will cause to bring neighborhoods down in value, unless we can proactively do something about it. Enter the FHA 203K loan. No one ever talks about it, because no one knows how to do it. Period. Either they have heard it is too hard, or their loan officer is not aligned with an investor that specializes in this product. Good for you, I have that relationship in place, and can tell you, this is the best loan out there!
There are some hoops to jump through to qualify:
Contact Brian Quigley with any questions related to obtaining a home improvement loan.