ReHab Loans to the Rescue? A 203K Loan might be the right tool for your job.

The abundance of short sales and distressed sales in general have impacted the market in several ways. Some of these effects are positive, Trust me I will explain.  Most distressed sales involve a financially challenged homeowner and as a result the home often times have a few issues to be dealt with such deferred maintenance or neglected homes due to their financial position.

The Streamlined FHA 203(k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required. Due to the rehabilitation amount limitation of $35,000, eligible improvements are limited and can not include any major rehabilitation or remodeling, new construction such as a room addition, repairs to structural damage, or site amenity improvements

 Not all Improvements are allowed below is a short list of the most common improvements (this list is not all-inclusive):

• Repair/Replacement of roofs, gutters, and downspouts
• Repair/Replacement/Upgrade of existing heating, ventilation, and air conditioning systems
• Repair/Replacement of plumbing and electrical systems
• Repair/Replacement of flooring
• Minor remodeling that does not involve structural repairs, such as kitchens
• Exterior and interior painting
• Weatherization, including storm windows and doors, insulation, and weather stripping
• Purchase and installation of appliances, including free-standing ranges, refrigerators Ect
• Improvements for accessibility for persons with disabilities
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Repair/Replacement/Addition of exterior decks, patios, porches
• Basement finishing and remodeling that does not involve structural repairs
• Basement waterproofing
• Replacement of windows and doors and exterior wall re-siding

 The 203K loan has been around for years with very little actual use of the program. The current stock of inventory still has its share of warts or challenges. The streamline 203K loan might be the solution your buyers are looking when they consistently lose out to cash buyers.  The lending community is looking for avenues to help and when structured correctly the 203K loan can expand the list of homes to show your clients.