“Perfect for a 203k” is our slogan as we enlist real estate professionals all over the country. We encourage you take FHA 203k offers on your fixers and when you do please add in your listing “Perfect for a 203k”. This will tell the people ‘people in the know’ that YOU are on board and that you have a fixer. Sellers who indicate they don’t want an FHA offer are ignorant of the fact that a 203k offer can go to 110% of the “after improved value” making more money available for the purchase. If a seller just won’t budge off their asking price a lot of times it can be solved by using the 100% rule. Always keep in mind that a 203k offer is all cash to the seller and the work begins after it closes escrow.
Example: Asking price is $300,000, work needed comes to $200,000 for a total of $500,000 and the “after improved value” is $500,000. Multiple offers come in up to $310,000 but your can offer up to $350,000 knowing that you can go to 110% of the $500,000.
Now, the selling agent has just found a way to get a bigger commission, the seller gets more than their asking price, the buyer gets a fixed up home, and the lender makes a larger loan… Lets focus on the seller… that’s right they said “no FHA or VA” offers would be entertained. Why? Are they less sophisticated? No they are the bank. So what is it then.. the listing agent interpreted the sellers instructions that they will not put any money into the property to get it sold… possibly. If the listing agent isn’t aware of the 203k to move his clients properties then this is a real problem. They need to be educated. One more possibility… they once heard from someone wbo heard from someone else that 203k loans take longer to close… That is usually what has happened. Someone tried a 203k in 1961 and it took a long time to close.. well that could have been true in 1961, 1971, 1981, and even in 1991 but in 1994 consultants were born and it ended. 203k loans can close as fast as a 203b or the standard FHA loan.
There is a secret to closing them faster… it is called using a 203k consultant. Consultants keep up with the changes in the program and bring a level of professionalism to the table. The other key ingredient is using a “team” to close your loans. That is a lender who knows the product and has closed a few… if they haven’t closed one yet, then they should at least use an experienced team to work with them. We have had two 203k loans close in 17 days, one in 20 days, and many close in 30-45 days. Once in a while there are circumstances that cause delay in a closing but it isn’t due to being a 203k in most of those cases.
What do you want to do with your fixer? Option 1 is to pay cash and get a construction loan for 5 points and 12-15% interest… oh, then get a “take out loan” in 6-12 months to refinance to pay off this short term construction loan. Yes, you pay points a third time when you do this refinance. So to summarize you can pay a couple points to purchase, a couple more points to get the construction loan, and a couple more points to refi out of the construction loan… that is about 7-10 point all tolled…. OR … get a low interest 203k loan and pay about 2 points, one time and get the money to fix the home at the same time in the same loan… what a novel idea. This loan is so much less expensive than any other way to get construction included it is a wonder every home isn’t a 203k loan.
Minimum repair amount per the guideline is that there is no minimum…. if it has a broken window you can get up to 110% of the after improved value loan amount.
Maximum repair amount… no maximum on the rehab amount. The maximum is on the loan amount and that varies by county or parrish. Therefore if your county has a maximum loan amount of $729,750 you could buy a home for $100,000 right after a total fire damaged home and put up to $619,750 to fix it up, or buy one for $300,000 and add 429,750 more to it to fix it up.. or buy one for $200,000 and fix it up for $5.000. There are endless possibilities.
Septic system failed… Perfect for a 203k Home is pristine but is too small… add a room… perfect for a 203k Home is pristine but has no garage… add a garage… perfect for a 203k Home needs a foundation.. perfect for a 203k Modular home is outdated and on a permanent foundation… replace the home using all or a portion of the existing foundation… perfect for a 203k Only needs carpet… perfect for a 203k Only needs appliances… perfect for a 203k
MA Young
704-451-1599
www.203konline.com
www.my203kconsultant.com
1351 Oliver Road, Fairfield, CA 94533
4350 Main Street, Ste 2