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FHA 203K Renovation Loan Success story in Louisville KY

Renovation loans can be a challenge in the Louisville KY market as well as many others.  We see lots of bank owned homes that need more than a little TLC to get them back in shape.  These would include Fannie Mae, Freddie Mac, local banks as well as the big boys, and HUD homes.

We recently bought a Fannie Mae Foreclosure that needed a lot of “Tender Loving Care”.  Our issues were termite damage, dilapidated carpet, single pane windows, shingles at the end of their life, gutters, siding with holes, outdated kitchen, etc.  Did I mention that it needed paint?  We knew that the price was right, but we required funds for repairs as well as the regular mortgage. 

We initially tried to get a HomePath “Renovation” loan as that seemed like a great deal.   Our first obstacle was finding a loan officer that could take care of us.  In Kentucky, HomePath loans are fairly popular, but we do not have anyone writing HomePath Renovation loans within the state.  To get a HomePath Renovation loan required us going to an out of state lender.  We found a good loan officer in Ohio and were quickly pre-approved.  As we progressed, we found that our down payment would now be 5% putting a squeeze on our cash flow.

FHA has always had their regular 203b loans.  They now offer a program called the 203k Renovation loan.  Within this program, they have the “Streamlined” version as well as the “Standard”.  The FHA Streamlined Renovation version is for expenditures of up to $35,000 and works for most people.  This enabled us to roll the repairs into the cost of the initial mortgage.  The list of what you can receive funding is quite large.  You can’t do major remodeling such as removing a load-bearing wall.  The FHA Standard Renovation loan is a different animal and something for another blog.

Before we made our offer, we contacted a general contractor of our choosing and had him give us an estimate.  We then felt comfortable making an offer and Fannie Mae accepted.  There was some paperwork involved, but we were able to close within 45 days.  Our contractor needed to show proof that he was licensed and insured and that was no big deal. 

As part of the appraisal process, we needed an “as-is” appraisal and a “finished” appraisal before we could get our loan.  The appraiser had our work estimate in hand so he knew what we were looking to accomplish.  The finished appraisal was estimated to be $15,000 more than we would have in the house.

On the day of closing, our contractor was able to receive 50% up front to cover his initial outlay for materials.  We are off to the races!!  A couple of weeks have passed and great progress is being made.  Our family moves to a newly painted and modernized home in a great neighborhood.

I like a story with a good ending.

For more details, feel free to contact The Dobbs Team in Louisville KY about this FHA Renovation process.

Discussion

#1 Posted by Bo Smith at 7/5/2011 7:12 PM
Great success story. Funny thing I too experienced a client calling me today frustrated over the much higher fees on a HomePath Renovation Loan, Downpayment and much higher rate. He was relieved to find out FHA 203k seemed to be a better path. Great post.
#2 Posted by Dan Moyle at 7/12/2011 -2:03 PM
Great post. The FHA 203k is definitely a great program for a TON of reasons. We're getting the HomePath Renovation details worked out right now as a lender, but we're already big fans of the (k) right now. We'll see how it goes with the new program as an option for us. Thanks for sharing the success story! Cheers.
#3 Posted by Homes in Laguna Niguel at 6/2/2012 6:02 PM
This is about easing the pressure on borrowers in a responsible way, but still most of the borrowers who might like to use the program to refinance their mortgages are facing substantial hurdles. You need to have an unblemished record of on-time mortgage payments for the last 12 months. Maybe you were late occasionally a couple of years back. That's OK. But the last 12 months need to be pristine.
#4 Posted by Brian at 6/5/2012 6:34 PM
This is a great success story. I currently live in Lexington and very interested in a foreclosure property in need of some TLC, however I am challenged with getting a lender to even to return my call. Can you provide the contact details of the lender you used in Ohio?
#5 Posted by Dee at 9/23/2012 9:15 AM
I am excited that I have stumbled upon this story it gives alot of hope I to am trying to find a lender to offer the 203k it sounds ok but getting lenders who offer it, is another story, i have been preapproved twice but neither lender offers it of yet i didnt know before i wasted mine and there time. luckily I found out about this loan through my realtor. Prayfully this works out for me I have found my house just dont have the money for the tlc....
#6 Posted by Felicia at 4/12/2014 9:42 PM
I am currently in the process of securing a standard 203k loan for a HUD property in Texas. The rehab loan can be up to the after repairs are completed value of the home plus 10%. So if the bank determines that when my home is complete it will be valued at $110,000 then I can borrow up to that amount plus 10%. If your home needs any foundation repairs then you have to go through the standard 203k loan, not a streamline 203k. Your best bet in finding a lender for a standard 203k is through a major mortgage bank like Bank of America rather than a broker that routinely sells off your loan once it is completed. I'm going through WJ Bradley for my loan. Generally the lender will have certain loan officers who only work on these types of complicated loans and that is who they will direct you towards.

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