Eligible Improvements for the FHA 203K Rehab Loan

What type of improvements qualify for the FHA (203K) Rehab Loan?

Since my last blog posting (Who needs a Rehab loan from FHA), I have received many calls and emails regarding to many features of the FHA (203K) Rehab loan. Our lender who offers the FHA Rehab loan, is a nationwide lender. I am not clear on how many states they have a license, but I do know that they lend in MN, WI, OH, CA.

The most recent request derived from a realtor seeking more information for his buyers. He has a classic example of a home missing its copper piping. What commonly happens to homes missing their copper piping is that the water is not shut off. This could result in water damage.

You can use the FHA 203K Rehab loan for homes missing their copper piping, but I would be worried about cost over run....for things that come up when you open up the walls and find water damage from the pipes that are missing.....the lender does NOT escrow 1.5 times the bid to cover overruns...what the contractor tell us on the bid is all we put in the loan....NO OVERRUNS.....be careful of the type of work under the umbrella of plumbing. Remember, the mortgage advisor is the one to manage this work until done. Then you submit the invoices for finished work, order title update, and get the appraiser to back out ---take pictures of the completed work. Then you turn all this in to the underwriter that approved your loan to begin with...then she writes the checks to the contractors.

If your customer borrows 15,000 but the contractor runs into damaged wood or mold...if that was not part of the original bid your borrower is now on the hook for that. NOT GOOD!!

The lender wants to know everything that has to be fixed and it must be accounted for....or they don't pay it....PERIOD. If the customer is looking at a property that needs major work...then get a sworn construction statement. This binds the contractor to everything. Make them sign and state that there will be no overrun and that what is on their bid is all that needs to be done....so if they have to rip open walls to inspect and verify that they are ok...then they better do it.

Replacing all the plumbing is very tough. The potential for other damage and mold is HUGE.....get a contractor to verify that there is not one single board of the framed walls that needs to be replaced and no flooring structural pieces then we are now willing to at least look at the total project.

What improvements are eligible under the FHA 203K Rehab loan program?

**Repair/Replacement of roofs, gutters, and downspouts
**Repair/Replacement/Upgrade of existing HVAC systems
**Repair/Replacement/Upgrade of plumbing (missing copper piping?)and electrical systems
**Repair/Replacement of flooring
**Minor remodeling, such as kitchens (no structural repairs)
**Painting, both exterior and interior
**Weatherization, including storm windows and doors, insulation, weather stripping, etc.
**Purchase and installation of appliances, including free-standing ranges, refrigerators, washer/dryer, dishwashers and microwave ovens.
**Accessibility improvements for persons with special need
**Lead-based paint stabilization or abatement of lead-based paint hazards
**Repair/Replacement/Add exterior decks, patios, porches
**Basement finishing and remodeling (no structural repairs)
**Basement waterproofing
**Window and door replacements and exterior wall re-siding
**Septic system and/or well repair or replacement

What improvements are ineligible under the FHA 203K Rehab loan program?

**Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall
**New construction (including room additions)
**Repair or structural damage
**Repairs requiring detailed drawings or architectural exhibit
**Landscaping or similar site amenity improvements
**Any repair of improvement that require more than two (2) months payment per specialized contractor

For thoughts, suggestion, or questions on the FHA 203K (Rehab loan), email scott@uptownfinancial.com or call 612-919-2119

For immediate information on the FHA 203K (Rehab loan), click here

For additional information on the FHA 203K (Rehab loan), click here

MN Foreclosure...What Do We Do Now.

MN Foreclosures...What can we do to help MN Foreclosures

MN foreclosures…and your capacity to help MN foreclosures

Now more than ever, we awake each and every morning to witness another MN foreclosure stick out on our neighborhood streets. As I drive thru North Minneapolis, St. Paul’s Dayton’s Bluff area, or thru a small town like Belle Plaine, I can’t help but think what the next step for these families is after they have vacated their MN foreclosed home. Although MN foreclosures may appear to be more concentrated in certain areas, I would bet that everybody in Minnesota has seen a foreclosure, heard about a MN foreclosure, or read about a MN foreclosure. I would hope that everyone in Minnesota knows how to spell the word ‘foreclosure’. How can Minnesotan not know about the seriousness of MN foreclosures when we hear the word every single day on the radio, in the newspaper, or day to day conversations? Learn and listen about this MN homeowner’s foreclosure process from the ‘cold call’ to almost ‘homelessness’ , click here.

As Minnesotans, we tend to forget that a MN foreclosure can often equate to homelessness. The bigger picture is that a strong percentage of the ones most deeply affected are our children. We will never be able to correct every personal housing situation, but we can make a difference by lending support. Non-profit organizations that aid homelessness are seeing a huge demand for support. Because of the surge of families seeking support from organizations, food shelters are drying up, housing assistance is at max capacity, and displacement starts to take a toll on your mind. Read and Learn about Homeless children in MN, Click Here.

How can Minnesotans help other Minnesotans? We need to save money in order to give money to non-profit organizations. Most Minnesotans are already feeling the financial pinch due to rising gas prices and food costs which is preventing them to give more to helping others

Here are some suggestions and thoughts to save:

--To battle the sky rocketing gas prices, let’s start carpooling. Ask your company/building to start a carpooling campaign to develop a network of energy minded participants.

--We all can take fewer trips to the grocery store. I am guilty of going to the grocery store about 5 times throughout the week. My family has now schedule two trips to the grocery store to decrease our usage in gas, energy, and time. Our key to success is ‘planning ahead’.

Here are some suggestions and thoughts to gvie:

--Reach out to your MN neighbors. Get to know them. Start a ‘Street drive’, where all the houses on the street collect one can of food a month and deliver that to the local food shelf in your neighborhood.

--Connect with your neighbors on your street. Organize a ‘Swap & Donate’ drive by displaying your items for your neighbors (for free) and donate the remaining clothes to the local shelter.

If you found this information helpful or mildly inspiring, please send me your comments at Scott@UptownFinancial.com

Nehemiah--Down Payment Assistance for MN First Time Home Buyers

MN First Time Home Buyers Learn About Down Payment Assistance via Online Seminar.

We have had a lot of interest recently from Minnesota first time home buyers inquiring about down payment assistance programs such as the Nehemiah program (down payment assistance), so we have scheduled a free online seminar where we will explain how the down payment assistance program works and how to find out if you qualify. Simply click on the link below to register.

Down Payment Assistance Programs In Minnesota

Join us for a Webinar on May 31 Space is limited. Reserve your Webinar seat now at: https://www2.gotomeeting.com/register/453570788 Learn about Down Payment Assistance programs available to Minnesota Home Buyers Title: Down Payment Assistance Programs In Minnesota Date: Saturday, May 31, 2008 Time: 11:00 AM - 11:30 AM CDT System Requirements PC-based attendees Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista Macintosh®-based attendees Required: Mac OS® X 10.3.9 (Panther®) or newer

If you would like to schedule a one-to-one seminar via phone, please contact me:

Down Payment Assistance: 612-919-2119
Down Payment Assistance:scott@uptownfinancial.com

Who needs a Rehab Loan from FHA

Do you need a Rehab Loan Program from an FHA approved lender.

The FHA 203(k) streamline program is the Federal Housing Administration’s primary program for the rehab loans for single family dwellings. The FHA 203 (k) Rehab loan program allows Minnesota homebuyers and Minnesota homeowners the capacity to purchase/refinance single family homes and finance the basic repair costs into a FHA Rehab loan. Minnesota first time home buyers may use the FHA 203 (K) Rehab loan along with the Nehemiah Program (down payment assistance).

The FHA 203 (k) Rehab loan program highlights:

· Allowed on purchases and refinance transactions for single family dwellings including those where the property is owned free and clear.

· Can be used for the repairs and improvements on purchases of HUD homes.

· Basic repairs cannot exceed $35,000. Only two draws will be allowed.

· Owner occupancy required. 1-4 Units (Existing property must be at least one year old)

· Fixed 30 year term only; no buydown option available.

· All repairs and improvements must be completed within 6 months.

The FHA 203(k) Rehab loan includes the following steps:

• A potential homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with their real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
• The homebuyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.
• The appraisal is performed to determine the value of the property after renovation.
• If the borrower passes the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs.
• At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.

I have successfully used the FHA 203(k) Rehab loan program in partnership with a nonprofit organization, such as the Nehemiah Program (down payment assistance) to rehabilitate properties in Minnesota. Due to the rising number of foreclosed properties in Minnesota, we feel it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities to Minnesota Home buyers. Not only is the FHA 203(k) rehab loan great for MN homeowners and home buyers, but we suggest that other FHA approved lenders get on board.

To sum up my comments, Minnesota homeowners have the capacity to use this program on their existing home. Perhaps MN homeowners can consolidate their first and second mortgages in to a FHA loan while repairing/replacing their appliances, patio/deck, or flooring/windows. Minnesota first time home buyers have the capacity to buy a home, fix it up and receive down payment assistance with the Rehab loan.

If you have questions about the FHA 203(k) Rehab loan program, we suggest that you get in touch with us to learn more. Scott Teigland --612.919.2119

Disclaimer: Not every FHA approved lender has this program available for their clients.

If you found this information helpful, send me your comments or contact me at scott@uptownfinancial.com ; 612.919.2119