Renovation Financing: Deffered Maintenance Welcome

It wasn’t too long ago that FHA financing was something brokers discouraged folks from obtaining.  We have all heard it “FHA loans are too difficult” and “FHA Appraisals cause too many problems”…

Today most loans are going FHA….The same folks that wouldn’t go near FHA financing think it’s the greatest thing since sliced bread!  The loan and it’s standards really hasn’t changed, the alternative options have disappeared.  However more than a few properties will need to have minor repairs and maintenance done to the property prior to closing…or does it?

Properties that need repairs prior to closing are still being bought and sold and not all of them have to be repaird prior to closing.  A good number of my referals come from a short sale negotiators, and it has dawned on me that unlike a traditional sale, it is much more difficult to get repairs done on a property that is under agreement as a short sale.

Solution – Structure the transactions as 203K loans…If the appraisal comes in needing repairs get the contractor and or Hud Consultantout right away.  Add the cost of repairs to the purchase..No need to delay a closing…and no need for the buyers to start looking again.   If no repairs are needed and the borrower doesn’t want to make any improvements…. no problem, close as a regular FHA loan. The difference in pricing between a regular and an FHA loan today 4.5%-4.625% for a regular FHA and 4.75%-4.875% for a 203K loan.  How much time and money do new home owners spend on do it yourself projects…You should sit down and do the math on what it would cost you in time and money to strip wall paper and paint rooms vs. paying a professional, before you sentence yourself to the next 3 months of hard labor on your time off! 

203K loans have the perception of being too dificult, take too long and are too expensive to obtain.  Those perceptions are simply not reality!