Huds 203K |
HUDS 203 k Loan |
Let Daunno Help you Rehab a Home w/HUD's 203(k)
One of the main advantages of working with Daunno Realty Services is its direct access to the civil engineers and construction managers at Daunno Development. Combing the efforts of Daunno Realty and Daunno Development, we’ve created a program that provides our clients with turnkey services encompassing all aspects of Residential Real Estate Development including assistance with land acquisition, engineering, architecture, permitting, and construction contracting and management.We’ve dubbed this program Daunno’s Triple Play as it has the licensed Realtors at Daunno Realty listing and selling our clients current home, helping them purchasing a new home or property, then bringing Daunno Development in to renovate or re-build the new home.
At the beginning stages of this process, many of our customers have questions on how to finance a project such as this. Many times, the answer is HUDs 203 (k) loan. (There is also a conventional renovation loan product now on the market)
Thanks to this little known loan, we’ve been encouraging our customers not to pass on a home because it requires anything from a few cosmetic repairs to a complete renovation or home makeover. Using the FHAs 203k Rehab mortgage program, we can easily provide a means to obtain funds for repairs and/or upgrades in any home.
203(k) - How It Is Different from a Traditional Mortgage
Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.
When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing for the rehabilitation; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation.
In a 203 (k), the borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work.
Eligible Property
To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.
Single family homes are eligible provided a portion of the existing foundation system remains in place. This foundation can be added on to or reinforced.
In addition to typical home rehabilitation projects, this program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.
