203k FHA REHAB LOAN - A Viable Option for Homeownership Opportunity
With short sales or foreclosures, it is common for the remark section of a listing to read "cash only or 203k rehab loan accepted." In this distressed instance, the loan is for a property that did not fare well in the recent superstorm and was left with a severly damaged lower level needing flooring, sheetrock, and a new heating system.
The 203k loan has 2 options: Streamlined - less than 35k in repairs or upgrades or with a Consultant - for more than 35k.
It is HUD's primary program for the rehabilitation and repair of single family homes and it is an important component of a blighted neighborhood's revitalization.
The 203k loan program includes the following basics:
Licensed contractors with General Liability and Workmen's Compensation Insurance Policies do the work.
General contractor estimates (2 or more) are the buyer's responsibility and are necessary to be approved for a mortgage.
The repairs are done after title transfer so closing is not delayed.
The FHA will focus on repairs necessary to make a house livable - mandated repairs (i.e., conversion to 3-pronged plugs that help guard against electric shock, removal of old asbestos-wrapped pipe insulation and the proper ventilation of those pipes, original 9-inch asbestos tiles, installation of banisters, compromised window fixes, etc.)
These come before desired upgrades unless the budget allows for it.
Contractors are paid as repairs are completed and this is supervised by the FHA Consultant.
In a post-storm New York, one of our biggest challenges, to date, has been contractor unavailability for the required estimates. These laborers are happily inundated with work and naturally gravitate to "real jobs" rather than insurance quotes. Even the buyer's relationship with those in the business has not helped him at all. As the house is vacant and the arrangement is for me to accompany the key, several hours have already been spent waiting for the arrival and opinion of the subject area experts. Other than this delay, this loan program appears to be a very viable option for the expansion of homeownership opportunities to a greater percentage of American families.
No matter how you spend your day, come home to this
Long Island Real Estate Needs?
Reach me @516.395.8376
Long Beach is a diverse community that is never short on entertainment. Interested in moving to Long Beach?
Don't hesitate to call me and we can begin our tour.
CHARLES RUTENBERG REALTY INC. ***** 516-575-7500 *****
ABOUT THE AUTHOR: Graduate REALTOR Institute
Jill Sackler, NYS Real Estate Broker Associate based on Long Island's South Shore
Specializing in Lifecycle Real Estate Transitions
©Jill Sackler 2010