Today’s market can be quite challenging, especially with so many short sales and bank owned properties being sold in “as is” condition. It’s bad enough that buyers must wait months before seeing a response to their offer or counter and after all of that waiting when the bank is ready to wheel and deal they respond accepting the offer or countering while only allowing a short window of time for the buyer to close. Among those, the most popular complaint among buyers as of late is in regards to the condition in a lot of today’s bank REO inventory. This is specifically frustrating for first-time buyers whose initial intention was to secure financing with the minimum down-payment required for FHA and little excess cash for repairs and remodeling.
For such buyers the FHA’s 203K Streamline may be the most appropriate loan program. This FHA product allows borrowers to purchase a new home with 3.5% down or refinance an existing loan with only 3.5% equity and receive up to $35,000 towards cosmetic upgrades plus up to an additional $10,000 towards energy efficient upgrades. It’s a great tool for borrowers who would like to purchase a “fixer” with very little out of pocket expenses.
An FHA 203k Streamline loan is the one that is favored by most people and as you’ve guessed it, majority of the advantages of a 203k loan come from here. You can find other people calling it “the easy 203k loan” because there’s not much involved in getting approved for them. The first thing that you should know about this type of 203k loan is that it is for properties that will need less than $35,000 in repairs.
Note that this property shouldn’t need structural repairs because it will probably cost more. When you are dealing with this 203k loan, there will come a time when you will be faced with two draws. In the first case, the lender will release about 35 to 50% upfront and in the second case the lender will release 50% when the work is complete. In such a case, the lender will have to inspect first before disbursement.Click to See the Latest Mortgage Rates»