Hi, I'm Marvin Hernandez a licensed Broker and Lender here in Southern California for over 20 years and I specialize in the FHA 203K loan. Currently there are many Home Buyers who are interested in purchasing a home with the FHA 203K but unfortunately there aren't many Real Estate Agents that are aware of the program or feel comfortable doing the transaction, and most Mortgage Lenders either can't, won't, or are just not familiar enough to do them. So today I'm going to cover an overview on the 10 Step Application process from beginning to end, when using a 203k Loan to purchase a property in California.
Knowing what to expect and what is required will help you keep your Agent on track and help you prepare in advance for the steps to be taken to efficiently process your transaction and limit delays. You might also want to refer your Real Estate agent to this guide to help them get a better idea of the 203K transaction if they're not familiar with the program.
Before we get into the 10 steps you must know there are two types of 203k loans that you can use to buy & fix up a property. There is the Standard 203K and then there is the 203K Streamline. So what's the difference?
A 203k Streamline - can be used for rehab & repairs up to $35k and a Contractors bid is all that's required.
A Standard 203k - can be used for major improvements over $35k and a "Cost Consultant" is required along with a Contractor's bid.
For more information about the Standard and Streamline 203k loans you can download the FHA 203K Buyer's Guide at the 203K Mortgage Lender website. Now let's go over the 10 steps.
Step #1 Selecting a Property (Home Buyer)
The property can be a Single Family Residence, 2 to 4 units, Condo or PUD. There are different maximum loan limits that apply and will vary depending on what county the property is located and whether it's 1 to 4 units. To find out what the maximum loan limits are in your area you can go to my blog to download the FHA 203K County Loan Limits list here.
Step #2 Making the Offer (Home Buyer and Real Estate Agent)
This is where You and your Real Estate Agent take out a pencil and paper or calculator and figure out the purchase price that you are offering the seller while taking into consideration the amount of money needed for repairs which will be added to the purchase price.
If you have a chance to meet with your contractor before putting in the offer that would be helpful, unless you have a pretty good idea of how much money will be needed to bring the property up to an acceptable standard or beyond. Keep in mind of what the future value will be after repairs and that the new loan amount will be based off of the purchase price plus repairs 110% of the after improved value whichever is less. The offer you make to the seller is the "As Is" price that means you are making an offer on the property in its present condition and that is the only price that concerns the seller.
Step #3 The Offer is Submitted (Real Estate Agent)
What should be in the offer:
This step is your Real Estate Agent's responsibility but it's good for you to know so you can review your offer and know what to look for before your Agent submits it to the Seller ... Read More >>
To download the complete Article and Video version of "the FHA 203K Loan: 10 Steps From Offer to Closing" as well as receive the FHA 203K Buyer's Guide go the 203K Mortgage Lender website and sign up. Once you sign up you'll get updates on the 203K Loan program, and additional resources as I'll be updating the website on a regular basis. And as always if you would like to contact me give me a call (888) 788-9398 or email me at Marvin@203kMortgageLender.com
