Silvertree Remodeling

What is a 203K loan and why should you care?

A 203k loan lets homeowners and buyers finance  the purchase, remodel or even refinance if they have an existing home loan through a single mortgage. Simply this, want to buy a home and remodel the kitchen right away, with the FHA 203K loan you can.

For immediate needs there is also a Streamlined 203K loan for handyman specials and fixer uppers. And borrowers also have an option with the HUD Title 1 Home Improvement Loan Program. These programs can help you finance at a better rate and take money out for improvements whether you own or are buying, payments to the contractors are secure so Home Improvement Contractors like these loans too.

You, as a homeowner can go to my web page for information or click on the links imbedded in this article.

Not to be outdone Fannie Mae has a program called Homepath for refinancing and renovations. Fannie Mae is the huge mortgage company that has been in the news so much this past year.

Eligible Repairs & Improvements

The Streamlined 203K loan allows for simple repairs that can be easily estimated and completed. Many are considered light cosmetic repairs, but some will require hiring a licensed contractor if it falls out of the borrower’s area of expertise. Here is an approved list of repairs / improvements from HUD:

• Roofs, gutters and downspouts
• HVAC systems (heating, venting and air conditioning)
• Plumbing and electrical
• Minor kitchen and bath remodels
• Flooring: carpet, tile, wood, etc.
• Interior and exterior painting
• New windows and doors
• Weather stripping & insulation
• Improvements for persons with disabilities
• Energy efficient improvements
• Stabilizing or removing lead-based paint
• Decks, patios, porches
• Basement completion and waterproofing
• Septic or well systems
• Purchase of new kitchen appliances or washer / dryer

Special Conditions & Terms

• No minimum loan balance required.
• Borrowers must occupy the property.
• Property cannot be vacant for more than 30 days.
• Work must be completed within six months.
• Work must be professional.
• If job requires a permit, borrowers must get a permit and a sign-off.
• Work must commence within 30 days from closing.

Repairs Not Permitted

• Landscaping or yard work
• Major remodeling
• Moving a load-bearing wall
• Room additions or add-ons to the home
• Fixing structural damage

Requirements to Perform the Work

• Borrowers can select among licensed contractors.
• The lender will review the contractor’s experience, background and referrals.
• The lender will want a copy of the contractor’s estimate and the agreement between the contractor and borrower.
• Borrowers can also arrange to do some or all of the work under a “self help” arrangement.
• Do-it-yourself projects require providing the lender with documentation supporting the borrower’s knowledge, experience and ability to perform the necessary work.

Disbursement of Payments

• Maximum of two payments to each contractor, including the borrower, providing the borrower works under a “self help” plan.
• No more than a 50% advance is allowed.
• Do-it-yourself allowances do not include labor; only materials costs are allowed.
• Final payment is paid after submission of evidence of payment to sub-contractors / suppliers or other possible lien claimants.

Reasons to Apply For a Loan Below $15,000

• The lender is not required to inspect the completed work.
• The lender is not required to authorize a third party to inspect the completed work.
• A letter from the borrower or copies of contractor receipts will suffice as notice of completion, providing the lender has no reason to determine a third-party inspection is necessary.

In all there are some decent deals and some opportunities for all kinds of homeowners with mortgage needs, or remodel and repair work that you would like to get done. So check it out and start planning.

Paul Lesieur/ Silvertree Const

Paul Lesieur General Remodel