| | | | | What’s your first step? Get pre-approved for |
| FHA’s 203K “Buy | | | | FHA Financing. When you find a house, you’ll |
| and Fix” Program | | | | have to get contractor estimates, then estimates from |
| | | | | a HUD approved estimator. Be sure that the house |
| | | | | will be worth what you’re paying for it, plus the |
| “I couldn’t believe the kitchen was completely | | | | improvements. |
| torn out,” said Kara Sanders. The house was | | | | |
| perfect for her family otherwise. “It’s was | | | | Once you’ve got contractor estimates, a HUD |
| the location we’d wanted – but we couldn’t | | | | approved estimator reviews the estimates. Then, an |
| get financing.” | | | | appraisal is obtained, indicating what the value of the |
| | | | | property will be after improvements are completed, |
| Bad roofs, missing fixtures, holes in walls, all typical for | | | | and indicating the present “as is” value. In |
| foreclosed properties. Even buyers willing to fix | | | | certain circumstances, when the total improvements |
| houses have a problem – getting the financing to | | | | are less than $35,000, the HUD estimator is not |
| close, and paying for needed improvements. | | | | required. |
| | | | | |
| “We didn’t have an extra $20,000 to pay for all | | | | Many buyers in today’s market are being outbid, or |
| the work.” | | | | are losing out on certain homes due to multiple offers |
| | | | | from other purchasers. Using the FHA 203K |
| FHA’s 203K program provides one loan to finance | | | | program often improves buyer’s negotiating |
| the purchase and the improvements. Escrow can | | | | position by putting them back in the position of being |
| close even if the property’s in bad condition. | | | | “the only buyer.” |
| | | | | |
| Here’s an example: | | | | Keep in mind the program isn’t only for items |
| | | | | needing repair. It can be used for adding a bathroom |
| $ 180,000 sales price of home | | | | or a bedroom, or making certain other improvements. |
| $ 40,000 cost of work to be completed | | | | |
| | | | | Kara Sanders was amazed. “I didn’t even |
| $ 220,000 total amount that financing is based on | | | | know this program existed. Now I’m telling |
| | | | | everyone about it!” |
| With this example, the buyer would put $7,700 and | | | | |
| finance $212,300. The 40,000 held for | | | | |
| improvements would be paid out as work was | | | | |
| completed. | | | | Joffrey Long is president of Southwest Bancorp, an |
| | | | | FHA lender since 1992. He specializes in 203K |
| “By the time we were finished, our house was | | | | REHAB loans and other FHA programs. He’s the |
| worth over $300,000,” added Kara. “It’s | | | | author of |
| better than any house we could have afforded to | | | | “The 203K Training Course,” and other loan |
| buy.” | | | | related training. |
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