203k Loans, Turning “Fixer-Uppers” into Dream Homes
Finding the right 203K lender
You need all the tools and resources you can get to meet the challenges of today’s real estate market. One of the best tools available to buyers, sellers, agents, and 203k lenders, is the Section 203k loan program.
Whether you are looking to finance the purchase of your new home or refinance your current mortgage, The Section 203k loan might be just the ticket for you. With a 203k lender, you can include the cost of repairs or rehabilitation into a single mortgage. Also, the down payment can be as low as 3.5 percent.
Vetting the Lender
There is more paperwork involved in a 203k loan. It becomes important to choose a lender that is experienced with 203k loans, because they know who the best experienced Real Estate Agents, HUD Certified 203k Consultants, Contractors, and home inspectors,if you need one, experience counts. Find a great team that has worked together in the past and knows the rules and how they apply.
Experienced Loan Officer
Unlike a conventional residential mortgage, a number of things must fall in place for the successful approval of a 203K loan, and for the completion of renovation work. Working with an experienced and knowledgeable 203K FHA lender is just the preliminary step. Finding the right helpers, HUD consultant, and the right contractor is also equally critical. As the 203K is a specialized loan program, it is absolutely essential that an experienced loan officer guide you through the loan approval and work completion processes.
Interviewing the Loan Officer
Based on the time you spend understanding the 203K loan program, it's possible to sort through the list of loan officers by asking them a few questions.
The first one would be the number of 203K loans they originated in the past 2 years. If they have done a fair number, ask them if they are willing to provide the names and contact information of a few of the borrowers that have worked with them in the past. If they are hesitant, it may be time to work with someone else.
Finally, ask the loan officer about their draw disbursement procedures, inspection requirements, fees and the length of time it would take to close on the loan.
The 203k loan is HUD’s primary program for the rehabilitation and repair of single-family properties. Section 203k loans are provided through HUD-approved mortgage lenders nationwide and insured by the Federal Housing Administration (FHA), which is part of HUD.
Buyers, sellers, agents, and lenders can all benefit from the Section 203k loan program as they work together towards achieving their American Dream.