To all real estate agents and home buyers looking for a primary home that needs some work. There is no secret about this loan, but I'm shocked how many people still no nothing about it. We have been marketing the FHA 203K Rehab Loan for years and have had many successful purchases with it just recently. Think of this loan as an FHA loan on Steroids...
If your a buyer looking to take advantage of the rock bottom prices here in Arizona. Or, if your a First Time Home Buyer, and you can't find a home in your price range that doesn't need some serious work done on it before you will consider buying it. Then I have the PERFECT loan for you to consider.
How it works: Through this loan program, renovations are done after closing by using a portion of the loan proceeds and applying towards the prearranged improvement costs to the home. For, example, you get pre-qualified for an FHA loan (there is no difference between qualifying for a 203K Rehab vs FHA Traditional loan). Once qualified, make an offer through traditional purchase contract. Again, the contract does not need to reflect the Rehab Loan will be used for purchasing the home. The contract is written for the purchase price only. The seller does not need to know about the money for renovations.
Once the contract is accepted and we open escrow the fun begins for us the lender.. We need to consult with the buyer to put together a detailed list of what they would like to renovate. Example. landscaping, roof (non-structural), carpet, painting, appliances almost anything you can think of to make the once mess into your home sweet livable home. Once we have the list of your needs we/client put out for bid to ONLY state licensed and bonded contractors. The client is responsible for choosing the contractor to complete all the work.
The list will be submitted with the loan for approval. As long as all renovations are approved (contact me for list of approved renovations) then we continue on to closing, just like any other loan. Meanwhile, the appraisal is done based on "as-is" state of the home. They will include a future "estimated value", which will be included with the original appraisal. In order to confirm that the value of the home will increase in value after all improvements have been completed. Ex. Purchase price is $100,000 approved list of improvements included $30,000, future value will be based off those completed improvements.
Funds will be held in an escrow account and distributed after closing directly to the contractor. The contractor has 60 days to complete all renovations and buyer MUST reside in property as their primary home once completed.
This is a real basic breakdown of how this loan works. We are EXPERTS with this REHAB loan, and will be happy to share many very successful recent purchases (bank owned) homes that were at best dilapidated and honestly uninhabitable. Then renovated into a PALACE in less than 60 days.
The renovations costs used for paying the contractor are combined into the original loan amount. So, your client will only have one payment ex. Loan balance amount using the example above would be $100,000 + $30,000 = $130,000 total loan amount. So, the difference in monthly payment is minimal and NO MONEY OUT OF YOUR CLIENTS POCKET. Are you kidding me....
Every Realtor should be marketing this to the public.. We do, and we get lots of interest... Please contact me for more details on this great home loan.
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