Making the 203k Streamline Work

July 4, 2014 admin

An FHA 203k Streamline loan is a great way for borrowers to obtain financing to complete non-structural repairs to a property they own or are purchasing. The Streamline program has the same underwriting criteria as a standard FHA loan, and will allow a borrower to finance up to $35,000 for the repairs. If used appropriately, especially with the high number of REOs on the market that need repairs and are priced accordingly, this loan will enable borrowers to get into a house with as little as a 3.5% down-payment, develop equity, and improve their neighborhoods, one house at a time.

The 203k Streamline requires that the repairs be completed by a licensed contractor, and the final disbursement of the repair funds will not be issued until the property is inspected to ensure that the repairs have been completed according the plans, in a workmanlike manner. With all of its moving parts, the 203k Streamline requires detailed planning and oversight, but with a system and team concept in place, the transaction can go smoothly.

Borrowers, Realtors, loan originators and contractors need to work together to ensure that the bids and plans are submitted in a timely manner, and that all underwriting conditions and requests for additional information are addressed promptly. The team should set realistic expectations about the timelines necessary to close the deal, and plan for potential delays in underwriting because the lender needs to evaluate the borrower, the contractor, and whether the added value of the improvments will exceed the cost of the repairs.

In today’s market, the 203k Streamline is a great tool to get “the wrong house in the right neighborhood” sold.

Please feel free to contact me at 888/627-2002 to discuss the 203k program, or any other financing issues.