Yes You Can Buy a House in Salida Colorado and Work Repairs into the Loan! Think 203K
In the past, buyers were out of luck if they wanted to purchase a house that needs repairs. They would require the work to be done up front before they would lend money on the home. That is where the FHA 203k comes in.
The 203k loan sets up one mortgage for both acquisition and renovation. They estimate the value of the home as-is and then again, with the projects completed. If it will appraise for the "projects completed" phase, and the projects are not luxury related but structural, safety, energy and/or livability related, then you have a good chance of getting this type of loan
There are Hud Approved lenders and these lenders have a list of Consultants who can help you with the repair part, bids, etc.
Below are the steps you will go through to apply for and use the 203k funds.
Note: Buyers who have paid for their home with cash can refinance into a 203k in 6 months
Steps for getting and completing a 203k loan.
- Have your real estate agent help you find the property you want to buy
- Have your real estate agent do a Preliminary Feasibility Analysis. Your agent calls them CMA's or Comparative market Analysis.
- Get the home under contract. Your agent will include a clause under "additional provisions" in Colorado that indicates 203K monies are being applied for and that the loan is contingent on the buyer's acceptance of whatever additional improvements are needed according to HUD or the lender.
- Select a GOOD lender.. one that knows how to help with this loan. We use Page Dexter in Canon City (719.371.4072) but you can also check for Colorado HUD approved lenders.
- Have a Consultant Prepare the Work Write-up and Cost Estimate for the Repairs. This person should come from your Lender's recomendation since they will work closely on this to be sure the work is done to HUD and lender specs, done on time and within the budget. If you can find a consultant who is also a home inspector, you will save money when the time comes for an inspection!
- Your lender will get a HUD case number for you.
- The Consultant visits the property, prepares the work order write up and cost estimate for the lender.
- The appraiser appraises the home. For big jobs, there may be more than one appraisal done...ask your lender about this
- Your lender reviews the application including the consultant's work and cost estimates.
- Your lender will conditionally approve the home as long as it appraises for the "as is" plus "work done" costs. This is why the consultant's job is so important. you want to make sure the home appraises when done!
- Your lender will approve the loan
- Your home will close. The repair monies will be put into an escrow account to be drawn upon as the work progresses.
- The work begins! You will have up to 6 months to get the work done
(ask your lender how much time you have). You CAN do the work yourselves. - Funds are released to pay for the work after it is done by a HUD inspector...your lender will handle finding this person for you. That person will approve the "draw" to pay for the work done on that stage of the remodel.
- Final inspection. If there are unused funds, they will be applied toward your loan principal.
This loan is a good choice for that fixer upper you have been considering! Let us know how we can help!
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More in the Salida Colorado Mortgage series
USDA Rural Housing Mortgages in Colorado
Yes You Can Buy a House in Salida Colorado and Work Repairs into the Loan! Think 203K
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