Who else wants a Bail Out plan from Uncle SAM?!

Fixer Upper

Bankers and Wall Street heavy weights were the only one’s who survived the latest recessions. So, why not search for your own bail out in the form of an FHA 203K loan. These programs have been on the books for a long long time, but they are becoming more relevant since with the rapid rise of home prices, no buyer is able to have any money left to accomplish the remodeling and rehab they have in mind when they buy their 1st home.

This is the FHA 203K program which most major US Banks including Wells Fargo, Bank of America now offer where the post purchase repair costs are included in your purchase loan. In the case of this loan program, your loan is based on the After-Repair Value of the home. Allow me to explain how this works.

You find an awesome fixer upper priced at $250,000 where the seller does NOT have the money to repair it. Let’s assume you will need $30,000 of repairs to turn this into a wonderful home. What the banks will offer you is a loan to purchase the home for $250,000 and then create an escrow account for $30,000 to be allocated for repair payments.

However, to be able to successfully access the repair funds you will need to :

1) Obtain Project Bids
2) Expect an appraisal visit from the bank who is giving you this loan.
3) Submit your contractor’s information to your lender.
4) Ensure ALL the permits are in place prior to the start of repairs.
5) Educate your contractor that the funds are typically released every 30 days and after inspections and work approval.

But it’s always smart to get Post-Rerhab home value request from a Realtor who knows the area to make sure that total money you are investing in this property will not place your home on top of the market.

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