If you are in the market for an older house to renovate, you are probably trying to figure out how to pay for the home and the work that has to be done on it at the same time. Applying for two separate loans may seem out of the question, but there are 203k rehab loans Seattle lenders have available that will combine the loan for the renovations and your mortgage into one affordable payment.
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.
When you are budgeting for your renovation, you must remember that more than the cost of repairs will be taken out of the loan amount. There will be two separate inspections to ensure the contractor is meeting FHA standards. Money will be set aside for a title update fee, which protects the mortgage lender from any liens the contractor might place 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 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.
When you are budgeting for your renovation, you must remember that more than the cost of repairs will be taken out of the loan amount. There will be two separate inspections to ensure the contractor is meeting FHA standards. Money will be set aside for a title update fee, which protects the mortgage lender from any liens the contractor might place 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.
