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Permits

As we are now into the new year, I hope everyone had a great holiday season. This weeks blog is about Permits. Not about home inspectors needing permits, however home inspectors searching for permits on the property they are inspecting. So, lets begin.

Just about every scenario we do, we are always in contact with the local building departments for building permits. At the end of the year a repeat client of ours was purchasing another property. They wanted to know about any open permits since the home had been just recently renovated. So, in our search we found 2 open permits.  Which brings us to this blog.

The work for the permits had been performed correctly. The building department was in error because they did not close the permit. It happens. Now what about other scenarios. For example, there maybe new electrical panel box and no permit. This is always noted on our reports. Or new garage door and opener but no permit. This happens too. So why permits?

A permit is to protect the home owner and government. For example, if the current home owner applies for a permit for finishing a garage area then their is multiple trades involved. Additionally, it protects government because they have a record on the property. If there is ever a bad error then the work can be pointed back to the contractor on record or the building department. Also, if no permit then their maybe repercussions when closing and a property appraiser sees new work that was not properly recorded.  The worst case scenario is a home is about to close and no permit was applied for upgrades and the county records office catches that a new kitchen was installed prior to closing. This will definitely raise a red flag.

So, when you are about to purchase a property or change insurance companies and need an insurance inspection, ask your inspector about permits. It is easy to obtain and we provide this service at no cost to our clients. For more information contact us anytime at 352-322-2700 or www.emeraldinspectionservice.com  Our inspections usually range from Clearwater to Odessa and from Zephyrhills to Hudson Florida areas.

 

203K Construction Loans

First my apology for not blogging in awhile. Traveling and a bit of sickness from travel has put me bit behind. This weeks blog is about 203K Loans. What are they, are they right for you and can anyone obtain one. To start out, a 203K loan is a construction loan based on the appraised value after the repairs. This type of loan is funded by FHA. Below is a detailed preview of 203K loans.

The 203(k) program can be used in one of three ways with one-to-four unit dwellings:

  • To purchase the dwelling and the land and then rehabilitate it
  • To purchase the dwelling and move it to another mortgaged property and then rehabilitate it
  • To refinance the borrower’s existing mortgage and then rehabilitate the dwelling

FHA 203(k) loans are available in two types:

  1. The Standard 203(k) (sometimes referred to as the Consultant K or Original K) is intended for more complicated projects that involve structural changes such as room additions, exterior grading and landscaping, or renovation that would prohibit you from occupying the residence. A Standard 203(k) is also used if your project requires engineering or architectural drawings and inspections. Under this program a single family property may be converted into a two-, three- or four-unit dwelling or vice versa so long as the owner occupies one of the units.
  2. The Streamlined 203(k) is designed for less extensive improvements and for projects that will not exceed a total of $35,000 in renovation and related expenses. This version does not require the use of a consultant, architect, and engineer or as many inspections as the Standard 203(k). As a result, when applicable, the Streamlined 203(k) generally becomes the simpler, less costly option.

Once the home buyer finds a property to purchase, the process of obtaining a loan insured under the provisions of the 203(k) program begins in earnest. The mortgage must be the first lien on the property being improved.

The maximum mortgage amount allowable under the 203(k) program is the lesser of:

  1. The as-is value or the purchase price of the property before rehabilitation, whichever is less, plus the estimated cost of rehabilitation, or
  2. 110 percent of the after-improved value of the property.

FHA 203k Features and Benefits

  • Only a 3.5% down payment is required, which can be gifted by family members
  • More flexible qualification requirements allow buyers with less than perfect credit to purchase a home at competitive rates
  • A single loan for the purchase and improvement of the home means only one loan application and one set of closing costs – saving both time and money
  • Can be used for either a purchase or refinance along with renovation costs
  • 15 and 30 year loans are available
  • Interest rates can be variable or fixed
  • FHA loans are assumable with no prepayment penalties
  • An FHA Energy Efficient Mortgage (EEM) allows the borrower to qualify for a larger mortgage to add improvements that will lower utility expenses
  • Can be used for a variety of improvements from the most simple to very complex
  • Renovation costs are wrapped into the mortgage, allowing the borrower to pay for the improvements over time at a much lower interest rate than conventional alternatives
  • Rather than paying a premium for a home in “perfect” condition, buyers can take advantage of discounted prices available on foreclosures or other homes on the market that are in need of repair or remodeling
  • Instead of paying for a previous owner’s improvements, 203(k) allows the buyer to renovate the home adding the features, colors, styles, etc. that suit their tastes and needs
  • Using the program could allow a buyer to purchase more home for the money in a more desirable location

Qualifying Home Buyers

To qualify as a home buyer under the FHA 203(k) program requires that the buyer:

  • Is purchasing a property that is eligible for the program
  • Is purchasing a property in need of at least $5,000 in rehabilitation
  • Earns enough income in order to make the monthly mortgage payments
  • Applies through an approved FHA lender

Qualifying Home Owners

In addition to the purchase of a home, the FHA 203(k) program is also available to homeowners who want to refinance their principal residence, consolidating all existing loans and have funds available for renovation purposes at the same time.

The FHA 203(k) program allows the homeowner to:

  • Refinance existing mortgages and wrap them into one loan that also allocates funds to cover renovation costs
  • To borrow up to 97.75 percent of the after-completed value of the property
  • 30 year fixed or adjustable rate loans available
  • All closing costs can be included into the new loan
  • Qualify with a minimum credit score of 640 (some lenders will allow a score of 620)

At Emerald Inspection Service, we are an approved 203K Consultant firm. We perform draw inspections for the home owner and contractor to make sure the work is complete. If its a streamlined loan, we will perform the minimal property standard (MPS) then complete what is called a project analysis. Now keep in mind the MPS is not a general home inspection, nor are they similar.

So if you are considering of refinancing your home to do repairs or purchase a property that needs some updating, this program may be for you. We perform these type of inspections throughout Florida. But we concentrate typically in the Tampa, Orlando, Hernando and Sarasota areas and within. For more information, contact us anytime at 352-322-2700 or check out our website: www.emeraldinspectionservice.com

 

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