Want to take advantage of a great bank owned property but a little intimidated by the amount of repairs needed? An FHA 203K Loan or Fannie Mae Homestyle loan can be great products, especially in today's market with a large number of aged properties on the market in various levels of disrepair.
Simply put these loans allow you to add the cost of needed repairs, renovations and upgrades to the purchase price of your new home (or the payoff on a refinance). This is typically the least expensive way to finance renovations and only requires one closing and one set of closing costs. Furthermore, the appraisal is based upon the anticipated value once the work is complete.
To take advantage of one of these loans your first step is to find a qualified contractor and create an itemized "wish list" of everything you would like to do to the property in a perfect world. (Ultimately you may not need to use this or any other contractor and may be allowed to complete some or all of the work yourself however you will still need a professional estimate) Next you need to work with a government approved lender to make sure your credit and income meet the minimum guidelines. Once you have a good idea that you will qualify your lender will order an FHA Appraiser to appraise the property "as-is", provide a list of the repairs that will be required by FHA. Once you and your lender have all of this information you can calculate the loan amount required to purchase the property and make the required repairs. Plus, if your debt-to-income and budget can handle it you can add in some or all of your "wish list" items.
Once you close on the loan the work to the property can begin. Depending on the lender, the contractor will be required to compete the work within 3 to 6 months and in some cases you can finance in the mortgage payments during this time period so you do not have to make a mortgage payment until the work is complete and you are able to move in.
Things to keep in mind when considering these loan products is that not all of them will allow you to contribute any of the labor, only the Fanne Mae option is open to investors/second homes and all FHA loans require mortgage insurance. A mortgage professional with experience in these types of loans can recommend the best one for your needs depending on your specific wants and needs.
If you have any questions I would be happy to answer them. I have several lenders that offer these loans. I can normally be reached at (207) 850-1007 or toll-free at (877) 440-2739. You can also visit my website or contact me through my website www.ReliantSanford.com.
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