Instant Equity Through a 203K Purchase?

I have recently been introduced to the FHA 203K Streamline loan for a purchase transaction that I am working on. The house was bank-owned, had been vacant for at least a year, but was in a good neighborhood. The borrower liked the property and saw opportunities to repair the house; but, would not be able to cash-flow the repairs or devote the time necessary to complete the repairs himself. The 203K loan will enable him to finance the necessary repairs into the purchase loan, for a down-payment as little as 3.5%.

As the transaction has unfolded, the borrowers instinct appears to have been on target. The repairs that will be done include the installation of new applicances, a new HVAC system, a new tankless water heater, new carpeting, new windows, and a new garage door. Under the terms of the loan, the repairs need to be completed by a licensed contractor within six-months of the close.

The home inspection did not identify any issues not addressed by the planned repairs, and the appraisal determined that the after-improved value of the house will provide the borrower with more than 10% equity in the property. This loan really can provide home buyers with the ability to find a deal on a house and finance necessary repairs and improvements to gain equity, without too much of their own sweat.

Sure, the loan does require some additional work for the loan originator and real estate agent, and may require 30-45 days to close, but under the right circumstances it is a very good product.

I have recently been introduced to the FHA 203K Streamline loan for a purchase transaction that I am working on. The house was bank-owned, had been vacant for at least a year, but was in a good neighborhood. The borrower liked the property and saw opportunities to repair the house; but, would not be able […]