How Buying a Home Is Likely to Change

Prospera Realty closing FHA 203k Stream Line Sales

Teresa Williams, Broker for Prospera Realty & Property Managment has closed several of the 203k Rehabilitation Home Loans in the past year.  As featured in the St Petersburg  times this type of loan assist buyers in purchasing homes that need work without buyers needing large amounts of cash up front for home repairs.  Prospera Realty is experienced with the procedures and equipped with the lenders to assist their clients with the FHA 203k Stream Line program.

St. Petersburg Times:  “The little known and once seldom used program backed by the Federal Housing Administration has caught fire as of late. In 2006, just two people used the program to buy property in the Tampa Bay area. Last year, the number jumped to 135. Nationally, the numbers increased nearly 700 percent. The program, officially called 203k Rehabilitation Home Mortgage Insurance, started decades ago. The FHA insures the loan, including the additional money for renovations and repairs. The government-backing encourages banks and other lenders to green light the loan.

The loans require only a 3.5 percent down payment and come with lower income and credit restrictions than conventional loans. The loan insurance program is HUD's primary option for rehabilitating and repairing single family properties. The loan limit is $292,500 and can be used only for owner-occupied houses. Investors cannot apply. Properties with four or fewer units can be financed using the program as long as the repair money is used for the owner's unit. The renovations must meet HUD standards for energy improvements like heating and air conditioning, window caulking and weather stripping. Buyers can even use the loans to make cosmetic upgrades, including new floors and appliances. HUD offers several levels of financing depending on the cost of renovations. After the loan closes, money for repairs and renovations is deposited into an escrow account and monitored by a Federal Housing Administration consultant. Contractors cannot access the money until they complete the work. The program has an additional benefit: Buyers often walk into a home with instant equity, thanks to completing repairs on an undervalued home.

Program details

. The program allows for purchases and refinancings up to $292,500.

. Homes must be owner occupied. Investors are not eligible.

. Pools, hot tubs, BBQ pits and outdoor kitchens cannot be included in the loan but up to $1,500 can be used for pool repairs.

. FHA insures the loan, but buyers still must find a lender who uses the program and then meet that lender's financing requirements including income and credit scores.

. Lenders can also have their own restrictions or options for repairs and renovations.”