The
FHA 203k program was originally set up for community and neighborhood revitalization and for expanding homeownership opportunities. It has worked so well that it has been expanded to other areas.
The program is set up to give homeowners the opportunity to purchase a home that is in need of repairs and updating, at a lower price, and then allow that purchaser to finance the after repairs and updating appraisal price. Therefore what this means is if you as the purchaser find a home that you really like and it has “good bones” but needs repairs and you don’t have the cash to do the repairs, you can do a HUD 203k.
Example: a home that is on the market for $50k, and needs new flooring, painting, appliances, HVAC, windows, etc., and would appraise for $80k if these items were done- you can purchase it at $50k, but you are financing $80k, do a partial close on it which would pay the seller the $50k and then the additional $30k would be used to do the repairs and upgrades. The normal time frame for these repairs is 60 days. Once all repairs are completed, there will be a final closing. The lender will release funds to the contractor as repairs are completed and approved by HUD approved consultants/inspectors.
There are two types of HUD 203k programs, the Streamline-Limited Repair Program; this will allow the buyer to borrow up to $35k toward repairs. The Standard or Full HUD 203k program will allow the buyer to borrow over $35k for major repairs.
Both are great programs, even with the detailed paperwork, appraisals, and estimates and the time it takes to set up the financing. For the buyer who would like to purchase, but doesn’t have the cash for repairs, it’s an awesome program.
I sold a property in a well sought after area for $270k, the buyer did a HUD 203k Standard Loan and financed $320k, therefore putting approximately $50k into the house, the revised appraisal on the property is $344k, which gives the owner $24k in equity from the get-go. Not a bad deal considering he did not have to take out a second mortgage, or home equity loan.
For sellers that have properties that aren’t quiet up to par with other properties in the area, and who don’t have the money to do the repairs or upgrades, the HUD 203k is a great marketing tool for potential buyers.
If you have questions or are just interested in getting more information on the HUD 203k programs, give me a call at 615-499-9445.
Cindy Brooks, Realtor
Cindy Brooks, Realtor
Exit Realty Music City
348 Cool Springs Blvd, Suite 1-A
Franklin, TN 37067
615-499-9445 cell
615-807-1204 office
CindyBrooksRealtor@gmail.com
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