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 kinds of 203ks. The standard is used for major structural repairs. You won't be able to live in the house while the contractors are working on it with this loan. There is much more paperwork involved with the standard as compared to the other type of 203k, the streamline.
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.
You will not ever see the thirty-five thousand dollars. Half of it is turned over to the contractor at the beginning of the project, with the other half going into an escrow account. After the project is completed, the contractor receives the escrowed money, and the lender closes the escrow account. The repair costs are combined with the mortgage payments for the buyer.
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.
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.
A contingency reserve, kept in escrow for any cost overruns, will take ten to twenty percent away from the thirty-five thousand dollar total. The extra cost of opening and maintaining the escrow account is known as the supplemental origination fee. If you can make the repairs you need within these parameters, a streamline 203k loan might be your best option.
There are two kinds of 203ks. The standard is used for major structural repairs. You won't be able to live in the house while the contractors are working on it with this loan. There is much more paperwork involved with the standard as compared to the other type of 203k, the streamline.
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.
You will not ever see the thirty-five thousand dollars. Half of it is turned over to the contractor at the beginning of the project, with the other half going into an escrow account. After the project is completed, the contractor receives the escrowed money, and the lender closes the escrow account. The repair costs are combined with the mortgage payments for the buyer.
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.
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.
A contingency reserve, kept in escrow for any cost overruns, will take ten to twenty percent away from the thirty-five thousand dollar total. The extra cost of opening and maintaining the escrow account is known as the supplemental origination fee. If you can make the repairs you need within these parameters, a streamline 203k loan might be your best option.
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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