Buy a Home and Make it Your Dream Home in One Loan
-By Republic Mortgage
September 28th 2009
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In this age of stimulus bills and bail outs you would expect a really cool mortgage loan program to help home buyers. Well, there is one, but it’s actually been around for years. There is a little known FHA loan program called the 203(k) that allows you to purchase a home and fix it up with the same loan. It’s not very well known because most lenders either can’t do them or just don’t want to do them. They are more work than the average loan officer wants to do and most companies don’t have underwriters that are familiar enough with them to confidently issue an approval that FHA will accept. At Republic Mortgage we feel the benefit to the client is so big that we have made the commitment to offer this program. We have loan officers who have been certified on this program (of course, that includes me) and the staff to get them done.
Here is an overview of the program:
1. It can be used in any area or county up to the FHA loan limits of that county.
A. Salt lake, Summit and Tooele counties -$729,750
B. Wasatch county - $431,250
C. Davis county - $397,500
D. Utah county - $323,750
E. Most other counties - $271,050
2. Determine what work you would like to do to the home. (The appraiser may require some items to be completed to qualify for FHA financing.)
3. Get bids on labor and materials. You may provide the labor on much of the work without a contractor.
4. If the cost of repairs is under $31,000, there are no inspections needed. You get half of the money when you close on the home and half upon completion of the work. If the cost of repairs is over $31,000, there is a construction consultant conducts inspections to authorize the disbursement of funds monthly.
5. You get a credit for energy efficient items like windows, heating and air conditioning units, and insulation.
6. We finance 96.5% of the total cost (purchase price + remodel). Your down payment is just 3.5% of the total cost.
7. You have up to 6 months to complete the work.
8. Your rate is locked upfront on a 30 year fixed rate. The rate is only about .25% higher than the normal FHA rate at that time.
This is the very best way to finance a “fixer-upper”. It takes a little more time and effort to put a loan like this together, but it is definitely worth it. The days of easy home improvement loans and zero equity lines of credit are over. If the house you find needs some work to make it your dream home, use the 203(k) program to make it happen. Call me anytime and I will walk you through the details.
Doug Walker
REPUBLIC MORTGAGE
11602 S. Redwood Rd. #B101
South Jordan, UT 84095
801-302-7220 Office
801-244-7620 Mobile
888-878-5403 Fax
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