Profile picture for christhefrog

Purchase + renovation loans

I'm looking at a number of properties, including one that is interesting, but would requier about $60k spending on it above the $250k price... I was looking into 203k type purchase and renovation loans but so far have not found any rates and also i can see a lot of bad feedback on zillow for these loans.
I have good credit, have pre-qualified for a 450k loan and have ~60k as a deposit... Anyone have any advice on how to proceed?
  • August 26 2010 - US
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Answers (15)

Here is a link which may offer you some useful information:
Fha 203k loans
  • August 26 2010
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This will give you a list of lenders who have done 203k loans in the last year:
http://www.hud.gov/ll/code/llslcrit.cfm
  • August 26 2010
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Profile picture for EstDalGrl
I have done a 203(k) FHA purchase and renovate loan. It worked perfectly although it took 90 days to close on the loan. You just have to hang in there. I rolled $35K for renovations into the $70K home purchase so the loan was for $105K. The house was appraised at $170K once the renovations were done.

Wells Fargo writes 203(k) FHA purchase and renovate loans. They are the only ones I know of (at least in Texas where I am).
  • January 07 2011
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203K loans are GREAT loans...they just require two things:  A company AND a mortgage consultant who know how to do them.  You have to have both...one without the other is useless.  Take Mike Canoe's advice...it IS a wonderful way to get a custom designed home and often you will end up with built in equity. 

The reason you see so much negative about them is that very few people do them...most loan officers and agents avoid them because they think the loan is just too difficult.  BTW, my company closes them in about 45 days and we are in most states.  I only work in CA, but would be happy to get you a great referral is you would like.
  • January 07 2011
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The 203K loan is a great loan for purchasing homes that need renovation.    Most issues with 203K loans arise do to the lack of the loan officers experience with the loan.  Find a loan officer who has a lot of experience with 203K loans it will make the process a lot easier.  What do you estimate the value of the property to be currently and what do you think the property will be worth after you put $60k into it?  FHA loan limits vary from state to state and by county where is the property located?
  • January 07 2011
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The op posted back August...I imagine they have moved on. 

I will say that there is no reason for a 203K loan to take 90 days to close.  Working with an experienced rep you should be able to close them in 30-45 days.  I closed 38 in 2010 with an average application to closing of less than 45 days.

Delays in closing are usually caused by folks not understanding what they need to get done.  Working with an LO that doesn't have experience closing them is like driving in a new city without directions or GPS....you will eventually get to where your going but it will take you much longer! 
  • January 08 2011
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Profile picture for EstDalGrl
I think the reason it took so long was that it was in the fall of 2008 and the market was crashing. Wells Fargo can probably do a 203(k) in 45 days now.
  • January 10 2011
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Good links.  My only comment on the list of lenders, in my opinion there is a real difference in working with a loan officer that has more than just access to the loan program but has actually closed 203K loans.
  • January 10 2011
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Profile picture for amyeliz88
I would not recommend a Purchase and Renovate Loan through Wells Fargo.  We had an extremely knowledgable loan officer who gave us incredible service, up until closing day when the "renovate" portion of the loan was handed over to their draw center. Since then, it has been an nightmare of dealing with employees who don't communicate, paperwork that's constantly incorrect (imagine that I'm the one to find THEIR financial mistakes on paperwork.  Come on they are a bank for god sakes) and it takes weeks to get a payment when it should be a simple process. If I knew it was going to be this difficult with the renovation portion of WF, I would NEVER have gone through them.  Their draw center is inept and lacks any sort of professionalism.  I would be embarrased if I was WF corporate to have this kind of business under my brand. 
  • December 12 2011
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Profile picture for dieselxdan
would you end up with TWO loans at the end, therefore you will have to make two separate payments? 
  • February 26 2013
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The 203K stream line is a much easier loan and as long as there isn't structural damage or a addition needed they work out pretty well. The other thing you can do is add a Energy Efficient Mortgage to that also. It is 5% of the purchase price up to your areas cap for Energy Improvements. If you have an FHA loan you qualify for the EEM. Call you local HUD office and they can help you locate lenders in your area that know who does these types of loans.
  • February 26 2013
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  • August 03
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  • September 15
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  • October 01
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