Eugene Loan Guy

Jonathan Blackwell is one of my associates in Atlanta GA and he has taken the FHA 203k Streamline Rehab loan to an art form. Not only has he got the lending aspect covered, but he has also developed relationships with contractors that are already approved for the process. He lists some very valid points about FHA203k Streamline mortgage loans that are really apply to the Eugene/Springfield market.

Looking to Renovate? 5 Reasons to Think FHA 203K

Posted by Jonathan Blackwell

at January 7, 2009

Current home owners are short on choices when it comes to paying for a renovation. Essentially, you have four options. You can: pay for it out of pocket; you can put it on a high interest credit card; you can pray your home still has enough equity to take out a home equity line of credit; OR you can refinance into a FHA 203k renovation loan. There are lots of reasons why the latter is the best choice, let’s discuss FIVE right now.

Reason #1 — Have you shopped for home equity line of credit (HELOC) lately? They have gotten way more difficult to find at a reasonable loan to value. The people who used to buy them in the secondary mortgage market have stopped because they have performed terribly in this market. For that reason many of the major banks are completely out of the home equity market. They don’t offer them at all any more and if they do, you have to worry that they will cut the LTV at anytime if they decide you are in a declining market. Many homeowners have come to me with unfinished projects because major banks denied access to their credit lines with almost no forward notice

Reason #2 — Renovation loans are based on AFTER REPAIR VALUE with an appraisal that is “subject to” the repairs being made. Equity lines don’t consider the value of your home when the repair is finished (only CURRENT value), 203k renovation loans do.

Reason #3 — 203K loans are first lien mortgage products. You only have ONE loan! Gone are the days of making two mortgage payments. One payment goes to one lender. Easy and convenient.

Reason #4 — Moving to a different home that needs repair? Good luck getting a first mortgage let alone a second to renovate. Lenders of traditional loans will not lend on homes in disrepair, but 203K renovation lenders are not concerned with the current condition of the property. Renovation lenders are only concerned with the after repair condition of the property.

Reason #5 — Thinking of putting the renovation amount on your credit cards? Why on earth would you do that when you can roll that into a lower interest AND tax deductible 203K FHA mortgage? Think about it.

In this market there is no better loan than the FHA 203K renovation loan if you are looking to spruce up your current digs (or looking to purchase that foreclosure down the street with no appliances). One loan based on after repair value at an affordable fixed rate. FHA 203K loans were built for this market.

Right now, the FHA 203k Streamline offers a FHA insured mortgage loan for the purchase or refinance with up to $35,000 for repairs (inclusive of 10% contingency). The other great thing about this loan is that it is at standard FHA interest rates with only slightly higher closing costs than a normal FHA loan. The process is a bit longer than a standard loan but is well worth the extra time. Call me today and let’s get you pre-approved for this outstanding program. Remember, most bank owned properties can’t be financed until the repairs are done. Be sure and check out my Part 1-3 series on FHA Loans last month.