How To Buy A Home AND Finance Repairs Into The Loan

Dated: 02/01/2019

Views: 1147

The Federal Government Can Be Your Best Friend!!

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Wow.  There's a bold statement, huh?  But it's true.  The Federal Housing Administration (FHA) is a United States government agency created as part of the National Housing Act of 1934. It sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building. The goals of this organization are to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and to stabilize the mortgage market.

 

FHA offers a program, the Limited 203(k) program, which permits home buyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Home buyers and homeowners can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or an FHA appraiser. Homeowners can make property repairs, improvements, or prepare their home for sale.  Home buyers can make their new home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet.The Section 203(k) program is FHA's primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization, as well as to expand home ownership opportunities.


Here's a quick outline:


TYPE OF ASSISTANCE:  

Section 203(k) insures mortgages covering the purchase or refinancing and rehabilitation of a home that is at least a year old. A portion of the loan proceeds is used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed. The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area. The value of the property is determined by either (1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110 percent of the appraised value of the property after rehabilitation, whichever is less. 

ELIGIBLE ACTIVITIES:

The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place. Section 203(k) insured loans can finance the rehabilitation of the residential portion of a property that also has non-residential uses; they can also cover the conversion of a property of any size to a one- to four- unit structure. The types of improvements that borrowers may make using Section 203(k) financing include: 

  • structural alterations and reconstruction 

  • modernization and improvements to the home's function

  • elimination of health and safety hazards

  • changes that improve appearance and eliminate obsolescence

  • reconditioning or replacing plumbing; installing a well and/or septic system

  • adding or replacing roofing, gutters, and downspouts

  • adding or replacing floors and/or floor treatments

  • major landscape work and site improvements

  • enhancing accessibility for a disabled person

  • making energy conservation improvements


Note that HUD requires that properties financed under this program meet certain basic energy efficiency and structural standards.


Here's the moral of this story.... When searching for a home, you DO NOT have to limit yourself to a home that is completely fixed up and move in ready in order to finance it!  Instead, think about your core requirements -- school system, number of bedrooms and bathrooms, floor plan, whether your home will serve the needs of multi-generational family members, etc.  Don't sweat the small stuff -- if the carpet is nasty, if you don't like the wall covers, if that lovely pet odor permeates the entire interior -- that can all be fixed.  By the way, if you don't like the formica counter tops in the kitchens and bathrooms, that too can be fixed.  Can you say GRANITE??


APPLICATION:
Applications must be submitted through an FHA approved lender.


Dealing with the Federal Government many times, check that, MOST times, is an intimidating process.  That's where we come in.  


We have Lender Partners who are very familiar with the process.  We can introduce you to our preferred list of qualified construction vendors to complete the project, and, we can help you get discounts on most, if not all, of the materials you'll need for the job.  Not very good at interior decorating?  Not a problem either - We can even introduce you to our Home Staging professional who will make suggestions based on your input!!   As YOUR full service Real Estate Company, we've got you covered!!  


So, just to whet your appetite for FHA's 203(k) program, and to give you a sample of homes that could qualify for the program, check out the list below...

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Click on any picture in this report to see more information/pictures about each of these properties.  
If no picture is present, it means that particular property is no longer available!

Terry Eibeck and Regional Realty specialize in Residential and REO Real Estate. We have the tools, time, staff and market experience to provide you with professional results!.  To see any property listed for sale throughout Northern KY, Lexington-Bluegrass and Greater Louisville MLS give us a call at (859) 620-7653. Visit us on the web at www.RegionalRealtyHomes.com

To search all properties for sale in the Northern KY MLS download my free app by texting 'terry' to 859-780-5527

Image titleFeatured properties may not be listed by the office/agent presenting this brochure.  Information has not been verified, is not guaranteed and is subject to change.  The data relating to real estate for sale on this report comes in part from the Internet Data Exchange program of Northern Kentucky MLS. 
Equal Housing OpportunityAt Regional Realty, we are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin. 

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Terry Eibeck

Terry is the Principal Broker at Regional Realty. He is a motivated Realtor specializing with investors and new home buyers located in the following areas; Alexandria, Ft. Thomas, Ft. Mitchell, Indepe....

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