Michael Cantwell in Florida provided some great information about termite damage including a video. And he provides a financing solution for serious damage. Michael is certainly the man in Florida to call for FHA 203k Renovation loans
Californians can call me when they need FHA 203k Renovation loans.
Bill Ladewig, Your FHA Guru
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Renovation Loans FHA 203k Streamline with termite damage occurs very often in Florida. I closed a 203k loan recently that I thought would be a good blog. The 203k streamline loan is tough to understand sometimes without real live examples. We are seeing quite a few properties with termite damage this time of year. That presents a problem for most lenders to close the transaction if you can't get clear termite.
It was a Renovation loan 203k Streamline in Miami Gardens, FL. The house needed about $20,000 in repairs. The repairs we included in this bid were the following, removal of the kitchen cabinets and installing new ones. We also included removing rotting wood and replacing new plywood and flooring. We were installing a new HVAC systems, a new range, a refrigerator. We also replaced a toilet and faucet. When the termite inspection was performed on the house the damage was large enough that the house needed to be tented. In this case that work would run about $1,100. The property was a bank-owned property and the seller wouldn't do this since the contract was sold in "as is" condition. The buyer needed to have a clear termite to close. Since he didn't yet own the property until close of escrow you couldn't expect him to pay for this. There are few reasons whey but one is because if the loan didn't close he would be out that money.
I suggested that we ask the general contractor used in this renovation loan to agree to revise his bid. Under the FHA 230k and the FHA 203k streamline we can include the work for the termite treatment. He was able to do this and were able to close the loan this way. Under the FHA 203k program the client can have the contractor do the work after closing along with the rest of the renovation.
The best part for me is the borrower getting a home closed under FHA that needs some work but wouldn't qualify for the regular program. The 203k streamline allows him to close the home with termite damage. Also he is getting the home under market. When you add up the sales price and the work he rolled into the loan he had about $8,000. in equity the day he closed! He only put up 3.5% of the acquisition cost or about $4,000 so he doubled his investment. This is not to mention the $8,000 tax credit he can get as a 1st time buyer.
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