Is One Of The 203k Rehab Loans Seattle Mortgage Lenders Offer Right For You

By Stephen Johnson

If your idea of the perfect house is one that needs some tender loving care, you are probably concerned about the cost. Unless you know about 203k rehab loans Seattle lenders offer, you probably assume you will have to get two loans. You've got to have one to buy the house and another to fix it up. Fortunately, you may qualify for the 203k option. This way you could get both loans wrapped into one monthly payment.

The kind of renovations you are going to make will determine whether you want to apply for a standard or streamline 203k loan. If the house is undergoing major structural changes, you'll need the standard 203k. You will not be able to live in the house while the renovations are being made. This loan requires a lot more paperwork than a streamline loan, but there's no maximum allowable loan amount.

Streamline is for cosmetic repairs. The maximum allowable loan is thirty-five thousand dollars. An appraiser will inspect the house and give you a list of necessary repairs, some of which may be required to get any loan. You get a bid from a contractor and give that to the lender. The lender approves the bid.

You will not ever see the thirty-five thousand dollars. Half of it is turned over to the contractor at the beginning of the project, with the other half going into an escrow account. After the project is completed, the contractor receives the escrowed money, and the lender closes the escrow account. The repair costs are combined with the mortgage payments for the buyer.

The FHA will only approve certain repairs with the streamline 203k. It will cover the cost of repairing or replacing roofs, downspouts and gutters, replacement of exterior siding, accessibility improvements, electrical and plumbing systems, and door and window replacement. You can't install a new heat and air system using the loan money, but repairing an existing system is allowed.

You can have asbestos removed and stabilize lead based paint. If you live in the country, and the septic tank needs to be repaired, your loan will be pay for that. You can have the kitchen and bathrooms remodeled, including the purchase and installation of new appliances. You are allowed to finish a basement, but it must be cosmetic only. Structural work is not included. The loan will pay for paint, mold abatement, and termite damage repair.

You have to be careful with the maximum amount of thirty-five thousand dollars, because other expenses will come out of it before the repair costs. These expenses include two inspections to make sure the contractor is meeting FHA standards. You will have to pay for a title update fee which protects the lender in case the contractor places liens against the property.

A contingency reserve, kept in escrow for any cost overruns, will take ten to twenty percent away from the thirty-five thousand dollar total. The extra cost of opening and maintaining the escrow account is known as the supplemental origination fee. If you can make the repairs you need within these parameters, a streamline 203k loan might be your best option.

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