Last week I was reminded of a great loan product that is available to buyers of all kinds. It is available to conventional buyers as well as FHA. If you are not familiar with the 203K program, then you need to be.
We are seeing more first time home buyers come into the market and with the existence of this loan program they can have their cake and eat it too! Frequently first timers look at a lot of REO's, Foreclosures, Short Sales, etc. They will see that most require some cosmetic work definitely as well as probably some major repairs. Being a first time home buyer, most don't have a clue what it costs to fix things. Sometimes you might find a property that they really like but they throw out that "But". But what? You don't like the paint? Maybe its the cabinetry? Flooring? Counter tops? Well you can take those objections off the table if your buyer obtained a 203K loan.
The process takes a bit longer than the "usual" contract to close timeline. Mostly it is due to the buyer's selection of contractor and submitting a very detailed bid. Once this is submitted the timeline can start moving a bit faster. The cost of the bid is then rolled into the mortgage. The down-payment is based on the appraised value after repairs have been done. Because there are federal guidelines on appraisal, this can sometimes put a kink in your speedy closing plans; so be sure you are prepared for delays. The 203K program is not for the faint of heart, but for the dreamer. As soon as you close on your home the repairs can begin. The good news is that the buyer's lender handles most of the work load and pays the contractor when it is time to dole out the cash. The even better news is, no one gets paid until the work is complete. So, if you are little concerned about having a contractor walk out on you having been paid and not completed the job, well it isn't going to happen in this situation. Every vendor who participates in this program is reputable and reliable.
Not all lenders offer this fantastic product, so contact your go to guy or gal to inquire about whether or not it is available. Also, remember just because they offer it doesn't mean they know how to use it. Be sure you lender is knowledgeable about the loan product you have selected. This goes for any situation, 203K or not.
If you would like more information on the 203K program and who is offering in this area. please contact me. I am a big proponent of this product and plan to use it myself. I am here as always to answer questions or give opinions, as best that I can. For your best HOME FIELD ADVANTAGE, get in touch!!
Rachel McLendon Behme
Keller Williams Realty
Affiliate Broker, ABR
100 Bluegrass Commons, Ste. 2100
Hendersonville, TN 37075