One result of the increase in foreclosure sales is a surge in “distressed” properties on the market. So maybe this creates an opportunity for those shut out of the market before. There are discounts out there, but what’s involved with getting a fixer-upper? You’re willing to do some work–is anyone willing to lend you the money?
The FHA Streamline K program may be just the ticket. You get a single loan to purchase and rehabilitate your property. Here’s what you need to do:
* Find a property. Your purchase offer must state that you will need a 203(k) loan to complete the purchase.
* Find a contractor to write an estimate of work needed and materials required. You aren’t allowed to do the work yourself unless that’s your line of work. Even then, you won’t be allowed to pay yourself. But you may be allowed to save money by doing cleanup and hauling.
* Find a lender approved to do 203(k) loans. Get your mortgage application approved. Get your project appraised (there will be two–before and after–and your loan will be based on the cost of buying and fixing, not the home’s eventual value.
* Complete repairs. When the loan closes, the seller will be paid and the remaining funds will be held in escrow for the contractor.
* Move in! Once the repairs are complete and approved, the builder receives final payment. You owned a “fixed up” house that may already be worth more than you paid. Those willing to make a little extra effort can benefit. It’s true that hard circumstances can create opportunities for those willing to look.
(4 votes, average: 5 out of 5)
Loading ...
I applied for this loan and provided several estimates for the work that needed to be done on the house. My LO said a Streamline K was easy to incorporate into the FHA loan process.
I completed a few other conditions, was approved, and told all conditions were clear. But my LO said the Streamline K items were still in underwriting. The second underwriting could end up delaying the closing.
My understanding is that the fixes are submitted as a package and should not take 3 weeks to get an answer.
Any idea what’s going on?
The Streamline K usually takes within 45 days to close. You can speak to the lender if he can do the things quickly.
Not having a look at your file, I am making a few assumptions here. First, there are two things that have to be approved–you and the property. So when you completed “completed a few other conditions” and were “approved” was it a credit approval for you or a final / full approval for you and the property? Because you can’t have “all conditions…clear” at the same time that “conditions were still in underwriting.” Property issues can come up with any purchase (private road? septic? earth to wood contact?) and it wouldn’t be unheard for additional issues to come to light during the process. If all conditions are clear you should be able to get that in writing. If not, you need a list of what hasn’t been cleared and what’s required. Then if you aren’t going to close on time, your Realtor needs to get working on your behalf and get you an extension.
Fred –
Let’s take a careful look at your note:
>>>I applied for this loan and provided several estimates for the work that needed to be done on the house. My LO said a Streamline K was easy to incorporate into the FHA loan process.
>>>I completed a few other conditions, was approved, and told all conditions were clear.
Nope. You were not approved. Approval means the deal is done and a check awaits. However, that is not the case here. It may well be that you supplied all required documents, but unless an underwriter says “yes” there is no loan approval.
Note that there is a difference between a loan officer and an underwriter. A loan officer sells loans and in the best case does what he or she can to match the right borrower with the right loan. An underwriter goes through the loan package to assure that all program requirements are met.
All the best,
Peter G. Miller
OurBroker(r)
FHALoanPros.com
BestReverseMortgage.com
OurBroker.com
Wow. You got your answer from a recognized FHA expert!Peter Miller writes about FHA alot and is a go-to source for mortgage pros whenever they have questions. So I’ll just limit my response to, “What HE Said!” http://www.ourbroker.com/?p=2293