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Fixer Upper Mortgages

One of the big challenges of buying a home these days is how to buy one of the many distressed houses that need fix-up.   The traditional ways to do this is to either save your cash and fix up with your own funds or take out a construction/rehab loan and later replace this loan with a traditional fixed rate mortgage (see ‘Doing the Two Step‘).  Both of these methods are beyond the means of most home buyer’s.  In an earlier post I talked about one program offered only on Fannie Mae owned properties called HomePath.  Today I want to talk about another program for financing real estate, the FHA 203K,  which a can be used on almost any distressed house.  This program is not available to investors.  But this program can be a great way to create the home of your dreams from what first looks like a run down mess.  The Minnesota Real Estaete Team will sponsor a seminar  Fixin’ to Stay? Use a 203k - Tuesday, March 2nd, 6:30-8PM in Burnsville.

There are two versions of the FHA 203K.  Both loans involve only one mortgage which finances both the purchase and rehab with one mortgage and one closing.

1.) The Streamline FHA 203K is meant for projects under $25,000 which are not too complex in nature.  This is perfect for those neglected homes that need paint, flooring, and non-structural repairs.

2.) The full version or just FHA 203k, can take on just about any rehab project up to tearing down the house and reusing the foundation.

These are great loans in today’s market, because there is so much fixer upper  inventory available today.  The FHA 203K also allows even first time home buyers to customize a home to fit their dreams.

So What’s the catch?

Actually there are a lot of “catches.”   First of all you need to find a lender willing to underwrite an FHA 203K  because not all lenders have the experience and capacity to help a home buyer with a 203K.  It also helps if you have a Realtor who can team with the lender to help you coordinate the complications of a 203K purchase.  Purchasing a house with a 203K requires a step buy step process that will involve a team of professionals to be involved.  The entire team needs to understand the process and paperwork.   There is also an order that should be followed to insure the best outcome.  Understanding, the loan process, the construction process and all the paperwork involved requires teamwork and preparation.   To borrow another sports cliche´ you first  need a game plan and you need a team to carry out that plan. Here are the key players needed besides your lender and Realtor: contractors, inspector, consultant (not needed for Streamline 203K),and appraiser.

FHA 203K Rehab Game Plan

As you might suspect that someone (me)  who writes a blog about Fixer Uppers might be able to help you put together that game plan and find great players for your team.    I’ve put together an online Businesses I Refer list online on my website FYIBob.com.  I have the names and contact numbers of people who would be a great additions to any FHA 203K team.   I can also provide you with great search tools for finding just the right fixer upper to rehab into your dream home.   I can set you up with MLS search functions for your phone for when you are driving around a neighborhood you like,  and an online home search engine you can use on your computer.

If you would like to sit down and discuss your own plans my contact numbers are on the sidebar of this blog.  Or you can use the contact form at the bottom of this post.   The Minnesota Real Estate Team will also be sponsoring a seminar to help you become more familiar with the FHA 203K rehab process. As I mentioned above;  on Tuesday March 2 from 6:30-8 pm Cornerstone Mortgage and the Minnesota Real Estate Team will sponsor “Fixin’ to Stay? Use a 203k!”

Use the contact form to reserve a spot at the seminar, request more information, or set up a one on one consultation.

Technorati Tags: FHA loan, Fixer Upper Inventory, real estate finance