If you’re in a situation like this, there’s actually some good news: the Federal Housing Administration has developed a special program for you: the Limited 203K loan. Basically, this eliminates a big part of the paperwork you need to fill, simplifying the process in order to obtain rehabilitation funds.

One of the main targets of this program is to help first-time homebuyers, who are often turned off by fixers or overwhelmed and not prepared enough to deal with all the work they need to do in order to buy a home up to today’s standards.

“Buyers get their foot in the door,” says Dan Tharp, mortgage loan officer at Guild Mortgage in Sacramento. “They end up saying ‘We have a lot of work to do here, and we’re never going to get it done,’” he added.

If this sounds familiar, the 203k loan might be the answer you were looking for.

Ok, but how does it work?

Simply put, this loan is used to repair a home you just bought, being figured into the original loan balance. Therefore, you won’t end up with two loans, but just one. And this is, by far, one of the major advantages this offer has.

Besides this, the 203k loan can be an adjustable-rate or fixed-rate mortgage, while the balance itself can exceed the purchase price of the property. What’s also worth mentioning is that borrowers are not required to hire professional consultants, licensed engineers, or architects. Therefore, if you are a handyman yourself and think you can do it, there’s no reason why you shouldn’t repair everything on your own. Of course, another cost-effective way of taking care of all the recommended repairs and improvements would be to ask your home inspector to put together a list with them!

What repairs does the loan cover?

We know, everything sounds very good until now, but a very important aspect is that, in fact, the loan allows just simple repairs, which can be easily estimated and completed. Many of these are considered light cosmetic repairs, but others will eventually require the intervention of a licensed contractor if they manage to fall out of your area of expertise. Make sure you check the list of approved repairs from HUD before starting everything.

What are the requirements to perform the work?

As a borrower, you can select a licensed contractor, while the lender will first review the contractor’s experience, background, and referrals. Also, a copy of the contractor’s estimate and the agreement between the contractor and borrower will be required.

Borrowers can set a “self-help” agreement, which confirms that all the work will be done by them. Also, do-it-yourself projects will require documentation supporting the borrower’s knowledge and ability to perform all the necessary work.

How is the disbursement of payments made?

A maximum of two payments is allowed for each contractor, including the borrower, providing the borrower works as a “self-help” plan. Secondly, if you want to give an advance, no more than 50% of the total value is allowed.

Opting for DIY? Such allowances do not include labor, as only materials costs are allowed. As for the final payment, it’s paid just after the submission of an evidence of payment to sub-contractors or other possible lien claimants.

Speaking about contractors, if you just applied for the 203k home repair loan, Hybrid Construction is here to help. Providing quality services to residential and commercial clients from the Hillsborough, Pinellas, and Pasco counties, they are specialized in loan rehab, being always ready to come up with a solution that meets your needs.

Picture Credit: pexels

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First of all, rehab means rehab. It doesn’t mean borrow money and go on a vacation to Las Vegas. It doesn’t mean spend the money on scratch-off cards either. It means you end the money to fix up an existing structure or one you wish to purchase. In a situation like this, the banks and homeowner all win out because a home or structure in disrepair is losing money, makes the neighborhood an eyesore, and no one gains.

The good thing about real estate is that it’s not going away anytime soon. It’s still probably their biggest investment you’ll make as an adult. A home is security in the bank even if you have a long-term mortgage. It’s something you can bank against to further your education or other helpful personal investments. The new forms of rehab loans are perfect for this.

Here’s the scenario. You’ve got a home let’s say is worth $300k on the standard market. It needs roofing repair and other repairs both necessary and cosmetic. The cosmetic part is of most importance because it’s what people see when they pass by your home. A home that looks shabby and neglected won’t fetch the market price nor be of use to anyone as an investment. It will bring down others’ property values and that’s no good at all. One would be surprised at how much a home’s value can skyrocket with just paint alone. A house worth $300k could look or become a value of tens of thousands more with a few thousand invested in new gutters, roofs, paint, landscaping. The new rehab laws afford for this and qualifications may be strict in some areas but for a good reason. The key is to use the money responsibly and not put oneself into deeper debt.

A good equation would be to have a home worth $300k and you take out a rehab loan for $5k. You use that money for shoring up the plumbing or electricity, fix the roof and above all else make the property look new with new siding or paint. The real estate speculators see your home and boost its value to $350k. Now you’re talking an ROI that not only pays off your mortgage, and loan but puts some extra money in your pocket.
Companies like Hybrid Construction understand rehab loans like no other. Their staff will sit down with you and go over such a topic each step of the way. It’s due to their understanding, compassion, and foresight that has brought this company into the limelight of homeowners who are desperately in need of a rehab loan so that they can either live well in their home or prep it for selling on the market. Just sit down with them, let them explain things out clearly and when the dust settles you should be on your way to responsible home ownership that pays you back for all your time, money, and effort.

The post When To get A Rehab Home Loan appeared first on Hybrid Construction LLC.

Single Family Home approximately 1200 SQ FT.  3 Bedroom/2 Bathroom near MacDill AFB, Tampa.  Property was purchased by an investor to rent.

Scope of Work:

1. Add Dishwasher and new granite countertops in kitchen
2. Remodel bathrooms
3. repairs and drywall repairs throughout
4. Interior and exterior paint
5. New appliances

Budget for repairs:

$20k

Investor’s Comments:

“Your work on this project was fantastic!  I really appreciate your communication throughout and it’s always good working with someone who is true to their word.  We hope to work with you again in the future for our next renovation.”

“We worked with Darren at Hybrid Construction. He understood what we were looking to achieve with our renovations.

Throughout the process he gave us updates, made suggestions, and kept the lines of communication open.

Although the project took a while to complete, this was per the established timeline from the beginning. Personally, this was fine with me as I’d rather the project take longer and have it done correctly than being rushed.

The project was spot on budget!

We plan to hire Hybrid Construction again for our next renovation.”

See before and after images below.

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