FHA 203k loan?

addictedtorosesMarch 23, 2010

My husband and I thought we'd stay in our current home forever. It will be paid off in October, and financial freedom was sounding really good! Plus, we have so many projects going here, that we wouldn't be able to sell for even a low price in this market. But (I'm sure this is a familiar story!) We fell in love with another house...Another project. It's a Hud house that needs so much work, it has sat and been reduced a few times. I know there are many people (homebuyers and investers) waiting for the next reduction, to pounce on it. If that happens, there will be a bidding war. I'm working with a good realtor and hope to go in now with an offer that the bank has already said they will consider. The problem is, I'm finding out that the loan needs to be an FHA 203k loan, and I'm not finding a lot of banks that offer it. The home needs 20k put into it before we could even move in, and this type of loan would allow for that, plus give us the escrow money that is already set aside for fix some of the problems that the gov. knows about. Does anybody know of a way to apply for this type of loan online or over the phone?

If we got this house, we would use a little money of our own to get our current house in rentable condition, and just rent it out until the market improves. If we don't get the house, we'll apply for a home equity loan and completely renovate our current house.

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I had heard that they have become far more difficut to obtain.

However, before you continue to search for a lender, realize that there are many PITA limitations....you have to have the contractor(s) lined up first...the work has to commence within a short period of time post closing (30 days), the project has to be finished at a certain time (not more than 6 months) , and the contractors must be willing to work on the 203K payment schedule, just to name a few of the rules.

There are a whole host of other criteria to be met...and certain repairs are not eligible.

If you have not done so already, thoroughly familiarize yourself with all of the conditions, and if you feel it is still right for you, contact FHA for the names of participating lenders.

Here is a link that might be useful: FHA 203K Information

    Bookmark   March 23, 2010 at 12:37PM
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I work for a Northern lender who does many 203K loans. Unfortunately we do not do loans in TX. I agree with the other poster, go to HUD's website and a lender on their list that is familiar with these.

They are complicated, and take time. If the repairs are less than $35,000 you can do a Streamline 203K which is a little easier.

They work, but you need to have a knowledgeable lender to work with or they can be a nightmare.

    Bookmark   March 25, 2010 at 12:51PM
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Thank you both. Based on your information and our own good sense (LOL!) we decided not to go for the house. There were just too many unknowns with that house, and we couldn't be sure that there wouldn't be more hidden expenses that we couldn't foresee. Plus, we had already looked at the FHA site, and the only bank that did the 203k loans was a corporate-owned credit union that there is no public access to. So we decided to renovate our own house to make it more suitable for our needs, and the odds look pretty good that we'll be able to get refinanced pretty easily.
Again, thank you both!!

    Bookmark   March 25, 2010 at 2:43PM
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If there are any structural problems with the house, the Streamline option goes away. The 203K loan process is NOT for the faint of heart. I'm in day #71.

    Bookmark   April 2, 2010 at 6:14AM
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