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THE FHA 203K LOAN: Facts on the FHA Streamline Repair Loan
By Chris | September 29, 2009
In the current marketplace, FHA loans represent an increasingly larger and larger portion of the mortgage market, especially with first time home buyers representing the landscape more and more. Coupled with the fact that many homes are short sales and foreclosures that are not in perfect shape, the FHA 203k is a learn that more and more home buyers are turning to in order to purchase homes. Often times you will even find some of these properties in very good condition. However, other times, the properties will need some work in order to bring them up to an adequate and proper status for the new buyer. For these instances there is one loan that home buyers can turn to that will actually allow them to build the costs of these repairs into the financing of the home purchase. That loan is the FHA 203K or the FHA Streamline Repair loan. Here are the basics you need to know about the program.
Purchase or Refinance
The FHA 203K loan is available for the purchase or refinance of a property and takes into account the purchase price or payoff (in the case of a refinance) and then adds in the cost of repairs to create your new loan balance. The repairs are then completed after the loan closing.
Property Value
The property must be appraised based on what the property will be worth after repairs. This value will then be used for a property value and the loan to value will be based off of the new loan value.
Streamlined
The maximum repair amount allowable is $35,000 with no minimum amount that can be taken for repairs. The funds will be escrowed at closing and released as the work is completed. A general contractor is not needed, but the work must be completed by a licensed professional.
Eligible Improvements
Eligible improvements include: repair/replacements of roofs/gutters, hvac, plumbing, electrical, flooring, painting, appliances, patios, porches, driveways, windows, doors, septic systems and other common repairs.
Ineligible Improvements
Ineligible improvements include: complete remodeling, new construction, structural issues, landscaping. As well any repairs taking longer than three months or not starting within 30 days of closing are ineligible.
Source: Strategic Mortgage, www.strategicmtgaz.com, 9/16/09
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