If you love old houses and are in the market for one for yourself, you have to take the cost of renovating it into consideration. If you're unfamiliar with 203k rehab loans Seattle lenders can offer, you probably think you'll need two loans, one to buy the house and one to fix it up, or save up for repairs as you go. Hopefully your lender suggested a 203k option. With this loan, you get the money to buy the house and renovate it all wrapped up in one.
The kind of renovations you are going to make will determine whether you want to apply for a standard or streamline 203k loan. If the house is undergoing major structural changes, you'll need the standard 203k. You will not be able to live in the house while the renovations are being made. This loan requires a lot more paperwork than a streamline loan, but there's no maximum allowable loan amount.
Streamline is for cosmetic repairs. The maximum allowable loan is thirty-five thousand dollars. An appraiser will inspect the house and give you a list of necessary repairs, some of which may be required to get any loan. You get a bid from a contractor and give that to the lender. The lender approves the bid.
You will not ever see the thirty-five thousand dollars. Half of it is turned over to the contractor at the beginning of the project, with the other half going into an escrow account. After the project is completed, the contractor receives the escrowed money, and the lender closes the escrow account. The repair costs are combined with the mortgage payments for the buyer.
A streamline 203k loan will only pay for certain repairs. It covers items like plumbing and electrical systems, repairing or replacing roofs, gutters, and downspouts, exterior siding replacement, window and door replacement, and improvements to accessibility. You can't buy a new heating and air conditioning system with this loan, but you can have an existing one repaired.
Removal of asbestos is allowed, as is stabilization of lead based paint. If you are outside the city limits, and have a septic tank, the loan will pay for any necessary repairs to it. You can remodel the bathrooms and kitchen. You may buy new appliances and have them installed. You can finish or remodel a basement, but you may only do cosmetic renovations.
You have to be careful with the maximum amount of thirty-five thousand dollars, because other expenses will come out of it before the repair costs. These expenses include two inspections to make sure the contractor is meeting FHA standards. You will have to pay for a title update fee which protects the lender in case the contractor places liens against the property.
A contingency reserve of 10 to 20 percent is set aside for cost overruns. A supplemental origination fee will be charged for the escrow account set up and oversight. If these parameters fit your renovation project, then a 203K may be just what you need.
The kind of renovations you are going to make will determine whether you want to apply for a standard or streamline 203k loan. If the house is undergoing major structural changes, you'll need the standard 203k. You will not be able to live in the house while the renovations are being made. This loan requires a lot more paperwork than a streamline loan, but there's no maximum allowable loan amount.
Streamline is for cosmetic repairs. The maximum allowable loan is thirty-five thousand dollars. An appraiser will inspect the house and give you a list of necessary repairs, some of which may be required to get any loan. You get a bid from a contractor and give that to the lender. The lender approves the bid.
You will not ever see the thirty-five thousand dollars. Half of it is turned over to the contractor at the beginning of the project, with the other half going into an escrow account. After the project is completed, the contractor receives the escrowed money, and the lender closes the escrow account. The repair costs are combined with the mortgage payments for the buyer.
A streamline 203k loan will only pay for certain repairs. It covers items like plumbing and electrical systems, repairing or replacing roofs, gutters, and downspouts, exterior siding replacement, window and door replacement, and improvements to accessibility. You can't buy a new heating and air conditioning system with this loan, but you can have an existing one repaired.
Removal of asbestos is allowed, as is stabilization of lead based paint. If you are outside the city limits, and have a septic tank, the loan will pay for any necessary repairs to it. You can remodel the bathrooms and kitchen. You may buy new appliances and have them installed. You can finish or remodel a basement, but you may only do cosmetic renovations.
You have to be careful with the maximum amount of thirty-five thousand dollars, because other expenses will come out of it before the repair costs. These expenses include two inspections to make sure the contractor is meeting FHA standards. You will have to pay for a title update fee which protects the lender in case the contractor places liens against the property.
A contingency reserve of 10 to 20 percent is set aside for cost overruns. A supplemental origination fee will be charged for the escrow account set up and oversight. If these parameters fit your renovation project, then a 203K may be just what you need.
About the Author:
You can find an overview of the benefits and advantages of taking out rehab loans Seattle companies offer at http://www.privatecapitalnw.com/fix-and-flip-rehab-loans right now.
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