Real Estate Expert and Mentor advice: HUD’s FHA 203(k) Program is an Excellent Program Way for Home Buyers to Finance Repairs for both Foreclosures/Distressed homes and Non-Foreclosures that need major repairs or rehab
from www.RealEstateMentor.co & Dr. Howard Edward Haller, CEO, Real Estate Mentor Co. .
“Doc” Haller is a respected United States Residential Real Estate Mentor, Commercial Real Estate Expert, Residential Real Estate Expert, Probate Real Estate Experet, Professional Real Estate Keynote Speaker, Seasoned Real Estate Investor, Experienced Commercial Real Estate Developer, Licensed California Real Estate Broker for over 25 years, Licensed California General Contractor for 20 years, Licensed California Engineering Contractor and Real Estate Counselor and Advisor
Real estate industry experts estimate in the United States homes that sold that in late 2011 and early 2012 that as either Bank REO’s, Short Sales, or as Foreclosures have sold at a discount ranging from 25 to 30% below other similar homes in the same areas. Purchasing foreclosures or distresses homes usually means discounts for repair, rehab or major deferred maintenance, which results in a material discount in the actual selling price for the cost of repairs or rehab. That material discount creates a financial gap most home buyers are unable to fund or finance.
Fortunately, HUD’s FHA 203 (k) program is the major resource to home buyers (for their primary residence only, no investors!) and qualified non-profit organization (such as local Housing Authorities) for rehabilitating and repairing single family properties, and it’s viewed as an important tool to revitalize neighborhoods. This program is restricted to 1-4 unit residential property and the repair work must be completed within one year. By using the HUD/FHA 203(k) loan program, potential buyers can get the money for needed repairs, which is not readily available through conventional lending.
HUD/FHA have limits on the maximum loan permitted and specific rules that must be met for the 203(k) program. The maximum loans amount is based the total of: 1) The Bank FHA appraised value or the purchase price of the property before rehabilitation (whichever is lower), and 2) The estimated cost of repair or rehab, or 110 percent of the property after the completion of all the improvements, according to HUD/FHA valuation.
The good news is there is low down payment for the borrower of only three to five percent of the total of the accepted bid price (purchase contract price) plus the cost of the repairs or rehab.
Caution to Buyers/Borrower:
A HUD FHA 203(k) loan takes longer due to all the addition documentation and reviews. The borrower needs to allow more time for closing and stay on top of the documentation requests and monitor the loan process.
Disclosure: Dr. Howard Edward Haller is a California Licensed Real Estate Broker, and Real Estate Mentor, but is Not a solicitation to lend money, just an informational article on real estate finance from an experienced Real Estate Investor, “Buy-Fix & Flip” Expert, Real Estate Lender, and Real Estate Broker.
Howard Edward Haller, Ph.D.
Chairman & Chief Enlightenment Officer
Licensed California Real Estate Broker (over 25 years)
Haller Commercial Real Estate, and Real Estate Mentor Co. www.RealEstateMentor.co
Howard Edward Haller. Ph.D.
Commercial Real Estate Mentor
Commercial Real Estate Investor
Residential Real Estate Mentor
Residential Real Estate Investor
Real Estate Broker (Licensed in California for over 25 years)
Licensed California General Contractor
Licensed California Engineering Contractor
Commercial & Residential Real Estate Developer
Commercial Real Estate Broker
Real Estate Speaker & Trainer
Keynote Real Estate Speaker
Real Estate Trainer (with over 1,200 students)
Probate (& Pre-Probate) Real Estate Expert & Speaker
Medical Office Building Expert & Speaker
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