The 203(k) 'Fixer Home Loan' 
The 203(k) Process -- What to Expect
 The 203(k) Loan Time Line
- Borrower is considering a home purchase or refinance on a home in need of improvements/ repair
- Borrower gets pre-approved for a desired loan amount, equivalent to sales price (or estimated/ appraised value for a refinance) plus the estimated cost of improvements.
- Borrower obtains cost estimates for work to be completed. Consults with Construction consultant.*
- Appraisal is completed using "after-improvements" value.
- Loan Closes
- Within 30 days of close, work begins on home. Must be completed within 60 days [203(k) Streamline 'Fixer Loan'] OR 6 months [Standard 203(k) 'Full Fixer Loan' -- work costing over $35,000 and/ or structural repairs or improvements]
- Inspections are done to verify all work is completed as orinally planned
- Final payment is made for improvements after final inspection is made & title is cleared.
*Not always required, but recommended
 Things to Keep In Mind
-
First draw payment to contractor is made 30-60 days after closing.
-
Your contractor must be aware of timing on payments
-
Self-Help Items: Painting, or other work for which you have documented work history. [ Example: A borrower who is a window installer by trade may ask to be allowed to install new windows in his home rather than paying a contractor for labor. On the other hand, an accountant by trade may not have the background to do so. ]
 Doing the Math
You will need to make a 'wish-list' of repairs & improvements the property needs, along with estimated cost for each item on the list. For example:
- New Furnace/ HVAC repairs
- Replace appliances
- Replace roof
- New floor coverings
- Weatherization (windows, doors, insulation)
- Interior/ Exterior paint
Follow the following link, and enter your list into the spreadsheet: 203(k) Calculator
|
