FHA 203 (k) mortgage questions

Anonymous · ‎02-07-2009

We are getting ready to buy a home in the next 3-6 months. There are TONS of newer tract homes (foreclosures) available in our area in Central valley, CA. Some of them have been vandalised and destroyed by sqatters. I have also seen several older homes that have great potential and are very inexpesive, but they look like they would need a lot of work. Would a FHA 203 (k) be an option in order to put in a new lawn, and getting an old, dirty swimming up and running? How is the FHA 203 (k) mortgage different than a regular FHA as far as qualifying and down payment?

Any info. would be great!

Bunny

Anonymous · ‎02-08-2009

There are fewer lenders doing the 203k . Of those who do, most only do the streamline version which allows up to $35k in repairs. It's also less complicated and therefore less expensive than the fullblown version. You might be able to get a list of lenders from HUD. Give one a call to see what they can tell you. I would definitely want to work with someone who knows what they're doing.

Credit-wise, it should be about the same for approval. I believe you may pay about 1/2% more in interest and there are other costs for appraisals, inspections, etc.

Anonymous · ‎02-09-2009

We are actually in the process of getting a 203(k) loan. Just make sure you get an escrow longer than 30 days. One process that takes some time is finding a contractor and having him get a pre closure bid on work that needs to be done. Also you have to get the contractor approved, which also takes awhile. My rate is a little higher than what it would be if I was just getting an FHA loan, 6.325%. What kinda sucks for us is that we are just getting this loan to move in the house. If we were able to we would have got a conventional loan seeing as we are going to rebuild in the near future.

jv