Today's potential new home owner's often have obstacles to financing "homes in need of repair". As guidelines have tightened underwriters review everything.
An option for foreclosed homes and for people looking to refinance is the FHA Limited Repair Streamline 203K Program. This program allows for either the purchase of or the refinance of properties in need of limited repairs--all in one loan. The loan is underwritten once and there is no need for anything to be re-reviewed and closed again upon completion.
As home equity lines are becoming a thing of the past, or severely limited in the loan to value utilized, this seems to be a new option for those "cosmetic repairs" that one once was able to do with an equity line. The FHA Limited Repair Streamline 203K Program goes by normal FHA guidelines and the Energy Efficient Mortgage may also be utilized as well.
Highlights:
- No cash to borrower (no cash out refinance permitted). This money is used for purchase and refinance only.
- No minimum for repair costs.
- Maximum repair costs come to $35,000. This includes a contingency of 10%, an origination fee, and a final inspection fee. The contingency is held until final disbursement.
- A principal reduction applies to funds not utilized
- Allows for 3 months to complete the repair work
- Variety of properties qualify
One cannot finance major improvements in this process but they can do a variety of allowed improvements.
*photo complements of flickr.com
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