If your idea of the perfect house is one that needs some tender loving care, you are probably concerned about the cost. Unless you know about 203k rehab loans Seattle lenders offer, you probably assume you will have to get two loans. You've got to have one to buy the house and another to fix it up. Fortunately, you may qualify for the 203k option. This way you could get both loans wrapped into one monthly payment.
There are two types of 203ks. The lender will probably refer to them as standard and streamline. Standard is for major construction and structural repairs. These are the kinds of renovations that require the homeowner to move out of the house while the work is being done.
Streamline is for cosmetic repairs. The maximum allowable loan is thirty-five thousand dollars. An appraiser will inspect the house and give you a list of necessary repairs, some of which may be required to get any loan. You get a bid from a contractor and give that to the lender. The lender approves the bid.
You don't get the money for the repairs. Half on the approved amount goes to the contractor, and the other half is put into escrow. Once the work is completed, the contractor receives the remainder in escrow, and the escrow account is closed out. The buyer has one mortgage payment that covers the purchase and the repairs.
The FHA will only approve certain repairs with the streamline 203k. It will cover the cost of repairing or replacing roofs, downspouts and gutters, replacement of exterior siding, accessibility improvements, electrical and plumbing systems, and door and window replacement. You can't install a new heat and air system using the loan money, but repairing an existing system is allowed.
Stabilizing lead based paint and removing asbestos is on the list. If you are buying a house outside the city limits that has a faulty septic tank system, you can use the money to have that repaired. You can have the kitchen remodeled, including new appliances, as well as redoing bathrooms. You can renovate or refinish a basement, but you can not do anything structural to it. The loan will cover paint, termite damage repair, and mold abatement.
You have to be sure to reserve enough money in the 203k loan to cover the additional expenses that will be applied to it. Ensuring the contractor is adhering to FHA standards will require two inspections. There is a title update fee that is protection for the lender in the event the contractor files a lien against the house.
There is a contingency reserve of ten to twenty percent. This is money set aside in the event there are cost overruns. A supplemental origination fee is charged for the extra work of setting up and maintaining the escrow account. If you can complete your project within these parameters, a 203k loan can be a perfect solution for you as the homeowner.
There are two types of 203ks. The lender will probably refer to them as standard and streamline. Standard is for major construction and structural repairs. These are the kinds of renovations that require the homeowner to move out of the house while the work is being done.
Streamline is for cosmetic repairs. The maximum allowable loan is thirty-five thousand dollars. An appraiser will inspect the house and give you a list of necessary repairs, some of which may be required to get any loan. You get a bid from a contractor and give that to the lender. The lender approves the bid.
You don't get the money for the repairs. Half on the approved amount goes to the contractor, and the other half is put into escrow. Once the work is completed, the contractor receives the remainder in escrow, and the escrow account is closed out. The buyer has one mortgage payment that covers the purchase and the repairs.
The FHA will only approve certain repairs with the streamline 203k. It will cover the cost of repairing or replacing roofs, downspouts and gutters, replacement of exterior siding, accessibility improvements, electrical and plumbing systems, and door and window replacement. You can't install a new heat and air system using the loan money, but repairing an existing system is allowed.
Stabilizing lead based paint and removing asbestos is on the list. If you are buying a house outside the city limits that has a faulty septic tank system, you can use the money to have that repaired. You can have the kitchen remodeled, including new appliances, as well as redoing bathrooms. You can renovate or refinish a basement, but you can not do anything structural to it. The loan will cover paint, termite damage repair, and mold abatement.
You have to be sure to reserve enough money in the 203k loan to cover the additional expenses that will be applied to it. Ensuring the contractor is adhering to FHA standards will require two inspections. There is a title update fee that is protection for the lender in the event the contractor files a lien against the house.
There is a contingency reserve of ten to twenty percent. This is money set aside in the event there are cost overruns. A supplemental origination fee is charged for the extra work of setting up and maintaining the escrow account. If you can complete your project within these parameters, a 203k loan can be a perfect solution for you as the homeowner.
About the Author:
You can find an overview of the benefits and advantages of taking out rehab loans Seattle companies offer at http://www.privatecapitalnw.com/fix-and-flip-rehab-loans right now.
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