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Friday, March 16, 2012

FHA 203(k) Rehabilitation Mortgage

By Aideyan Omoregbee
FICO 580 REQUIRE

FHA 203(k) MORTGAGES
FHA section 203(k) insured mortgage enables homebuyers to finance a purchase or to refinance an existing house plus the cost of its rehabilitation through a single mortgage.

Purpose
Section 203(k) fills a unique and important need for homebuyers buying a house that needs repair or modernization by reducing the stress associated with the complicated and costly process. The initial loan for buying and improvement of the property usually come with relatively high interest rates, short repayment terms and a balloon payment at loan’s end.

However, Section 203(k) offers a solution to both borrowers and lenders by insuring a single, long term, fixed or adjustable rate loan that covers both the buying and rehabilitation of the property. 203(k) insured loans save borrower’s time and money and protect the lender by letting them insured the loan before the condition and adequate value of the property can be fully determined.

FHA's Streamlined 203(k)
1.      FHA's Streamlined 203(k) loan program is used for less extensive repairs/improvements, allowing homebuyers to finance between $15,000 - $35,000 into their mortgage to improve or upgrade their home before they move in.
2.      With FHA's Streamlined 203(k), homebuyers can easily tap into cash to pay for property repairs or improvements identified by a home inspector or FHA appraiser.

You can find out more about a Streamlined 203(k) program by calling a Tricont Mortgage Client Advisor (803) 317-2500 or email us @ aomoregbee@tricontmortgage.com about your questions.

Type of Assistance
Section 203(k) insures mortgages by 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 at completion.

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.

Many of the rules and restrictions that make FHA's basic single family mortgage insurance product (Section 203(b)) relatively convenient for lower income borrowers apply here. But lenders may charge some additional fees, such as a supplemental origination fee, fees to cover the preparation of architectural documents and review of the rehabilitation plan, and a higher appraisal fee.

Eligible Customers
1.      All persons who can make the monthly mortgage payments are eligible to apply.
2.      Cooperative units are not eligible
3.      Individual condominium units may be insured if they are in projects that have been approved by FHA or the Department of Veterans Affairs, or meet certain Fannie Mae guidelines

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 as long as the existing foundation system remains in place.

203(k) FHA 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 borrower may make using Section 203(k) financing include:
1.      Structural alterations and reconstruction 
2.      Modernization and improvements to the home's function
3.      Elimination of health and safety hazards
4.      Changes that improve appearance and eliminate obsolescence
5.      Reconditioning or replacing plumbing; installing a well and/or septic system
6.      Adding or replacing roofing, gutters, and downspouts
7.      Adding or replacing floors and/or floor treatments
8.      Major landscape work and site improvements
9.      Enhancing accessibility for a disabled person
10.  Making energy conservation improvements
11.  HUD requires that properties financed under this program meet certain basic energy efficiency and structural standards.
Application
To apply for a 203(k) loan, please call a Tricont Mortgage client advisor (803) 317-2500 or email us @ aomoregbee@tricontmortgage.com for assistance

MORE INFORMATION
For more information and/or to apply for this loan program, please call a Tricont Mortgage Client Advisor @ (803) 317-2500 or email us @ aomoregbee@tricontmortgage.com for assistance. .....Thank you very much for your trust and business.

Hope we can earn your trust and help you with all your mortgage and financial needs.....  PLEASE RATE & LEASE US A COMMENT.

Note: A brochure on, rehabilitating a Home with HUD's 203(k), is available by calling a Tricont Mortgage Client Advisor @ (803) 317-2500 or you may email us @ aomoregbee@tricontmortgage.com  with your request.

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