Some of you homebuyers, homeowners and Realtors may have heard of the FHA 203k Streamline home loan but many people haven't or are not quite sure how it works.
The FHA 203k Streamline home loan does not require you to be a first time homebuyer and there are no income limitations. The property you are looking to purchase however has to be owner occupied. There is an investment property rehabilitation loan that is available, but it is not an FHA product. If you would like more information on this product, you can e-mail or call me directly.
Now I mentioned cosmetic repairs. If you are a homebuyer these cosmetic repairs include new painting inside and out, new carpet, appliances, cabinets, countertops and windows, a roof and much more. It does not include luxury items such as a pool or spa repair or anything that includes construction or that may need a permit.
A property that is in need of more major and detailed work could qualify for a standard FHA 203k home loan, which is a different loan than the FHA 203k Streamline loan that we are covering here.
The FHA 203k Streamline home loan is an abbreviated version of the FHA standard 203k home loan and has become a popular loan option when it comes to purchasing lender owned properties, reo's, foreclosures short sales or for properties that just need a little tlc. The reason for the popularity is that the seller of the property many times will not put forward any funds to fix the property prior to selling it and you definitely don't want to put any money into the property that's not yours yet, because if the deal falls through, you won't get those funds back.
So the property is sold in "as is" condition. A homebuyer purchasing an "as is" condition property under market value is enticing. However getting a conventional or FHA loan on the property may not be possible. I see many properties fall thru escrow several times for the same reason, and homebuyers and Realtors seem to think that magically a lender is sooner or later just going to accept the property with outstanding health and safety issues. This is not going to happen, lenders will not allow a loan on a property of this type, contrary to a homeowner or Realtor point of view.
Some "as is" condition properties do not meet minimum lending standards. For example a home with a missing toilet or broken windows which creates a health and safety issue, meaning a conventional loan or standard FHA loan isn't possible. The property is in sub-par condition.
Other lender owned properties are missing the heating and air conditioning unit or are missing sinks, doors, electrical outlet plates and the list goes on and on. These types of "as is" condition properties can drive away homebuyers as well as lending instututions. But the FHA 203k Streamline home loan can solve health and safety issues and other problems because these cosmetic repairs can be made after you buy the home. So obtaining a loan, and receiving up to $35,000 in minor repair funds, all in 1 loan with a 3.5% downpayment, makes it a great deal and is the only loan of it's kind.
Another problem the FHA 203k Streamline home loan solves involves the lack of personal funds for the cosmetic repairs ie...carpet, appliances etc.. Many homebuyers are tapped out financially after coming up with the downpayment and closing costs for their home purchase. In addition, the 2nd mortgage or Home Equity Line of Credit (HELOC) loan guidelines now require 20-25 equity to qualify making options to obtain repair and home improvement funds very limited in our current marketplace.
so dare to dream and go ahead and take a look at some properties that have been sitting on the market for awhile, or some lender owned properties, and paint a picture in your mind as to what the home would look like with new carpet, new paint, new appliances, and new countertops and cabinets and know that there is a loan out there to cover the purchase loan + up to $35,000 for cosmetic repair-all in 1 loan.
It's also worth mentioning there are some ins and outs on how to properly structure these loans, but if you would like more information on the FHA 203k Streamline home loan, you can download a more in depth free 203k loan guide by clicking here. Feel free to send me an e-mail at streamlineman@earthlink.net or give me a call at 805-276-1942 and I would be happy to help in capacity.
Kevin Walton
Best Capital Funding.
Certified Loan Advisor
Cell: 805-276-1942
Best Capital Funding - 6930 Owensmouth Ave. #102 - Canoga Park, CA 91303
Office Phone: (818) 887-2779 Fax: 800-506-0632 Cell Phone: 805-276-1942
Best Capital Funding.
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