Financing Options

While we can accomodate several options for financing your home improvements, from Home Equity Lines of Credit, Personal Loans, Consumer Credit accounts to Second Mortgage options, we can offer a 0% interest, unsecured line of credit of up to $25,000.00. We also specialize in accomodating FHA 203K Standard and Full Renovation Loans.

The FHA 203K loan is a type of financing that is insured by the Federal Housing Administration. It allows homeowners to obtain both a purchase loan and rehabilitation financing in the same transaction. Before this loan program, a homeowner had to obtain an initial, temporary loan to purchase the home and a separate rehabilitation home loan to make any necessary repairs. Only after the repairs were complete could the homeowner gain permanent financing for their newly improved home.

The 203K loan was designed to streamline the process of buying a home in need of repairs. In order to provide funds for the repairs, the loan amount is based on an expected future appraised value that takes into consideration how much value the completed repairs will add to the current value. Up to $35,000 over the purchase price of the home can be financed into the loan to cover the cost of repairs.

The contractors chosen by the borrower to do the repairs will receive the money for their work in two draws. One draw is for 50% of the work and is disbursed at the beginning of the repairs while the remaining 50% will be disbursed after the work is completed. The repairs must begin within thirty days of the closing of the loan and must be completed within six months. The amount paid to the contractor(s) must be determined before the loan closes by obtaining written bids on material and labor costs. The homeowner can do the work himself provided that he is a licensed and bonded contractor.

203K Loans are not only for repairs and renovations, however. They offer a wide-range of benefits to home buyers, while still only requiring a 3.5% down payment for qualified buyers. For instance, they can be used to update or remodel a home, to refinance or to take care of inspection issues, including structural ones. The client could scrape and rebuild a home. They can also be used in conjunction with first time home buyer programs such as CHFA, CHAC, HUD $100 down, and more.

Other benefits of 203K Loans:
Low appraisals can be increased by 10% or more.
Clients can still close in 30 days.
Any money left over once the project is completed is removed from the principal balance of the loan.

There are two types of FHA 203K Loans: 203(ks) (streamline); and Full 203(k). The streamline 203k has a cap of $35,000 including fees (all costs), with no minimum repair cost. It is designed as a "refurbish and rehab" loan for borrowers to finance non-structural and cosmetic repairs only. The full 203k may be used for structural repairs and room additions as well.

One of the 203k lender specialists that we work with are Ray Williams with Summit Home Mortgage.

As always, we're here to answer any questions you may have, so please feel free to contact us anytime.

Check out your projects average cost vs. value for 2010-2011.