Want to Buy a Fixer-Upper?

With an increasing amount of foreclosures and short sales in our local communities, there are many opportunities to buy a home in need of  ”a little work”.

The FHA has a great loan program called the 203K Streamline  or Express Rehab Loan.  It essentially partners with nationally recognized home improvement companies such as Lowe’s, Home Depot, or Sears to make non-structural repairs.

The streamline loan has fewer restrictions and less hassle than the normal 203K loan because the borrower chooses a home improvement company who acts as their general contractor in preparing an estimate for the lender.  The loan limit for the express is $35,000 and approved repairs include roofs, HVAC, plumbing, electric, new appliances, and more. 

An appraiser will also need to approve the estimate to get an “after improved” value for the home – so remember, when choosing a home to rehab, you don’t want the most expensive or the least expensive home on the block; you want to end up the best of the median.

At closing the borrower will be issued funds from the lender to pay the contractor in agreed installments.  The lender will hold back 10% of the funds as a reserve until it is satisfied the repairs are complete.  The reserve will be refunded to the borrower when the lender’s final inspection is complete.

If this sounds like something you might be interested in – here is a list of lenders in the Charlottesville area that are approved by HUD.

Happy Remodeling!