By Stephen Johnson If you love old houses and are in the market for one for yourself, you have to take the cost of renovating it into cons...
If you love old houses and are in the market for one for yourself, you have to take the cost of renovating it into consideration. If you're unfamiliar with 203k rehab loans Seattle lenders can offer, you probably think you'll need two loans, one to buy the house and one to fix it up, or save up for repairs as you go. Hopefully your lender suggested a 203k option. With this loan, you get the money to buy the house and renovate it all wrapped up in one.
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.
This loan is designed for houses that need cosmetic repairs. The most you can get is thirty-five thousand dollars. An appraiser has to inspect the house first and give you a list of repairs that are either needed or required. You have to get in touch with an approved contractor, get a bid from him, and forward that to the lender. If the bid is approved, the repairs can go forward.
The lender will not give you the money for the renovations. Half of it is given directly to the contractor, and the other half goes into an escrow account. After the work is completed, the contractor receives the money that was in escrow, and that account is closed out. You will be paying for both your house and the repairs made to it with one monthly payment.
There is a list of repairs that FHA will allow with a streamline 203k. Improvements to accessibility, electrical and plumbing systems, repairs or replacement of roof, gutters, downspouts, exterior siding, and windows and doors are allowable. Installing a brand new HVAC system is not on the list, but repairing an existing one is.
You can have asbestos removed and stabilize lead based paint. If you live in the country, and the septic tank needs to be repaired, your loan will be pay for that. You can have the kitchen and bathrooms remodeled, including the purchase and installation of new appliances. You are allowed to finish a basement, but it must be cosmetic only. Structural work is not included. The loan will pay for paint, mold abatement, and termite damage repair.
You have to be careful with the maximum amount of thirty-five thousand dollars, because other expenses will come out of it before the repair costs. These expenses include two inspections to make sure the contractor is meeting FHA standards. You will have to pay for a title update fee which protects the lender in case the contractor places liens against the property.
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.
This loan is designed for houses that need cosmetic repairs. The most you can get is thirty-five thousand dollars. An appraiser has to inspect the house first and give you a list of repairs that are either needed or required. You have to get in touch with an approved contractor, get a bid from him, and forward that to the lender. If the bid is approved, the repairs can go forward.
The lender will not give you the money for the renovations. Half of it is given directly to the contractor, and the other half goes into an escrow account. After the work is completed, the contractor receives the money that was in escrow, and that account is closed out. You will be paying for both your house and the repairs made to it with one monthly payment.
There is a list of repairs that FHA will allow with a streamline 203k. Improvements to accessibility, electrical and plumbing systems, repairs or replacement of roof, gutters, downspouts, exterior siding, and windows and doors are allowable. Installing a brand new HVAC system is not on the list, but repairing an existing one is.
You can have asbestos removed and stabilize lead based paint. If you live in the country, and the septic tank needs to be repaired, your loan will be pay for that. You can have the kitchen and bathrooms remodeled, including the purchase and installation of new appliances. You are allowed to finish a basement, but it must be cosmetic only. Structural work is not included. The loan will pay for paint, mold abatement, and termite damage repair.
You have to be careful with the maximum amount of thirty-five thousand dollars, because other expenses will come out of it before the repair costs. These expenses include two inspections to make sure the contractor is meeting FHA standards. You will have to pay for a title update fee which protects the lender in case the contractor places liens against the property.
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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