Remodeling Loan

[ineedcreditbad]

Need some help here. I bought a house in May 09 and am looking to do some re-modeling, any idea what banks are giving out this kind of loan as I dont have any equity.

Thanks

Ed

[ShanetheMortgageMan]

The FHA 203k loan can finance improvements to a home you already own (as long as it's your primary residence) or on a home you are about to purchase.  In both situations it bases the loan amount on the value of the improvements "to be completed".  So as long as the future value will give you the equity you need for the loan amount, then chances are it'd be possible.  Below is a link with a lot of information about the FHA 203k loan.

http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm 

[ineedcreditbad]

Thanks Shane appreciate your advice.

Ed

[ShanetheMortgageMan]

Welcome, anytime.

[Anonymous]

Hello Shane,

I thought I didn't need a 203K or remodeling... so closed with a conventional FHA203(b), then realized it was a mistake (tons of expensive rebuilding needed). No hope for home equity in this credit market with insufficient seasoning.

Mortgage holder bank is telling me that there is also a one-year seasoning requirement to convert a plain-vanilla existing FHA 203 into a 203K, and that I would have to pay all closing costs and the downpayment again if I convert within my first year.

Is this true? FHA reg? Or bank requirement? Any way to change a 203 to a streamline 203 K without one-year waits or $10k penalties?

Feel free to PM me if this isn't a public matter. Thanks

[ShanetheMortgageMan]

The FHA 203k is a complete refinance if you are already in a FHA 203b loan, so yes a brand new set of closing costs, appraisal fees, etc. would all apply.  Doesn't matter if you wait 12 days, 12 months or 12 years - those costs would still apply.  Down payment wouldn't be required, as the equity (if any) can be used to meet that requirement.

Edit to add:  I guess if the lender who made the loan hasn't had it insured by FHA yet, after closing they could go back in and re-underwrite it based on an FHA 203k loan guidelines and get it insured that way.  Not entirely sure if that's possible but only way I could think of "converting" it to a 203k loan without incurring costs. 

Message Edited by ShanetheMortgageMan on 09-01-2009 02:53 PM