Three quick tips about using an FHA 203K loan for renovating a Jacksonville foreclosure...
If you haven't heard about this program, it's a regular FHA home loan coupled with a renovation loan. If you qualify for a standard FHA loan, you can get a 30-year fixed as long as both loans only total 96.5% loan-to-value. The difference is that your foreclosure home doesn't have to be in tip top shape to close the sale. You purchase the home in "as-is" condition and make repairs and your desired upgrades after the closing. (Of course, you don't have to purchase a foreclosed home-any home will do--we just think it's the most likley choice given the real estate market in Jacksonville, FL!)
Keep in mind:
1. Value must support investment. Make sure your Jacksonville FL real estate agent finds a home that will sell for less than it's worth. Get the home at a discount! Remember, you must add the cost of all your anticipated repairs to the sales price. A common mistake home owners make is putting too many upgrades into the home. It doesn't take long for renovation costs to drive your loan amount ABOVE the current market value of the home. (i.e., is this really a home/neighborhood where crown and granite are expected?) No one should be upside down on a home before they move in.
(1) PURCHASE PRICE
+ (2) REPAIRS
(3) TOTAL INVESTMENT (less than or equal to market value)
2. It's going to take longer. FHA 203K loans are more complex, involve more parties (such as contractors, builders, inspectors, etc....) and therefore requiring more time. Expect 60 days from contract to closing here in the Jacksonville FL market.
3. Choose your repair work carefully. First, select a HUD consultant and perform an inspection immediately after your offer is accepted. Identify deficiencies in the property and determine which improvements you must or should make, always conscious of the total price (purchase price plus repair costs = market value). Then choose your loan type: "Streamline" if your repairs are cosmetic and non-structural in nature and will not exceed $35,0000; "Full" if repairs are structural and extensive (no limit).
While these loans aren't for everyone, it's an opportunity for those who normally could not participate in the buying frenzy associated with foreclosure homes in Jacksonville, FL to get a great deal or purchase a first home.
These are only three quick tips to use when considering FHA 203K loans. We've got many more details and access to local lenders who close FHA and FHA 203K loans frequently here in the greater Jacksonville FL area. Send us an email or give us a call.