FHA 203 K Loan. How does it all work?
My fiance and I are in the process of buying a house. The house needs some work. Like
-New furnace
-New Windows-
-Insulated
-Exterior doors
- New flooring
We are putting the loan through as a FHA 203K loan. Our realtor told us that they we pay the contractors for all of this work and it would just be added to our loan.
Please help me know how this all works before we get to far in.
The house is 54900 the offer accepted was lower
Oh also we have not had an inspector in yet that is later this week
I really appreciate any help!
Okay.. so they take the value of what the house is worth now, you tell them what you want to do and what improvments you want to make and they calculate what the house would be worth after improvments?
How do they calculate what they will let you borrow? Like if its added to your loan do they go by the difference of what your were approved for as to your buy price? Thats what I dont know!
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Tags:
Buying a house,
exterior doors,
FHA 203k,
fha 203k loan,
fiance,
flooring,
furnace,
loan,
process of buying a house,
realtor,
work
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This link should help.
http://www.fhainfo.com/fha203k.htm
Your Realtor is right. The money will be place in an escrow account at the closing agency, 50% of the funds will be drawn out when the work starts then the work will be inspected and more money will be drawn out of the account. 10% will be withheld until all the work is finished and the FHA re-inspection is done. Once the inspector Green lights all the work the remaining money will be disbursed, everyone will be paid and you will have gotten a fantastic deal on a house and made it our own!!!
Excellent Luck!!
I would hope that you both are very strong borrowers. Rarely do these loans go through. They take a long time and most lenders won’t do them.
I LIKE THE 203(K) LOAN… I really have a worksheet I can email you on one of my own properties! In this program, they will lend for the structure and the repairs. They Take the value as it is, and then they do an estimate of the property value AFTER completion. The then take that difference and (there is a formula that they use) they will escow that money. You don’t get charged interest on it until you draft on it. Now, I didn’t receive 50% up front. I received a quarter, but also had the property itself financed. You act as the general contractor and it is up to you to check around for excellent prices. Your contractors MUST be licensed and fully insured! Once the project is complete, then they adjust the payment and rate term, as you only pay for what you have used, and you do only have a certain amount of time for competion. the FHA 203(K) program is a fantastic one! You also have to live in the property for a minuim term as well.
get three different estimates to fix the whole house. After that add extra money because depends on upon what kind problems they will find on the way to fix it will increase. Be aware that fix take time and patience, cost lots with licensed companies. U need to Maure if worth go thrue this.