Who has done a 203K? (PMI, loan, interest rate, 30 year fixed)
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My fiancee and I are considering an FHA 203K. We have a budget of about $230K and have found a home in a nice subdivision where all of the homes were built in the immediate post war era ('46-'48) and a majority have either been extensively renovated or knocked down entirely with new ones built in their place. As a result property values are pretty decent, and we feel that we've found the "worst home in the nicest neighborhood." Its a very small home which is basically stuck in the 1940s. We feel that we could pick it up for about $150-160K given the shape its in, which would leave us approximately $60K for renovations with the required contingency reserves as well as financing six months of mortgage payments.
We're looking for feedback on the process from folks who have actually gone through the process:
-How did you find it overall? Was it a hassle? Mountains of paperwork?
-How was your interest rate? We've heard that 203K rates are generally higher than most 30 year fixed mortgages and that most people refinance when renovation is complete
-Did you put down less than 20%? If so, how much was the PMI?
Hmmm...I was told by a broker that as long as you came in under the county loan limit you were ok? Is it possible that they recently removed the 35K cap?
Quote:
Originally Posted by renriq02
Also, the total loan amount must not exceed the county loan limit
LOL...this is New Jersey so let's just say that the county limit for where I intend to buy is MUCH more than I could ever afford to borrow
I remember there were loopholes, but the only one that came to mind was natural disaster areas. I did a few of these back when there were a lot of hurricanes in FL in 2003 and 2004.
The rates were typically just .25% higher (back then) and the paperwork was not so bad. It was just important to have a good budget of what the costs will be. The PMI was the same as a typical FHA loan which is a lot less than Fannie Mae Programs (except for My Community which is almost the same).
Some lenders have decided not to offer the program anymore, so the options have gotten more limited. That usually means the standards and the pricing will get tougher.
This is true. A streamline 203k will only allow someone to do up to $35,000 in renovations. This amount does include additional fee's FHA charges. If you wanted to do more than $35,000 in renovations you would be required to have a HUD Consultant involved. When involving a HUD Consultant you may be required to do more improvements than you considered. The HUD Consultant would inspect the property and would determine additional work that would be required to be included in with your renovation bids. If going with a traditional 203k loan you can go up to the county max for the loan amount. However if you are doing energy eff. you can go over the county max by $8,000.
If dealing with Bank of America. This has been my experience so far. I closed my 203K loan back in May and completed repairs in July. I have been unable to get a response from BofA since they took over my loan from Taylor Bean. The voicemail and emails go unanswered. I am starting to think that I will never get paid.
The loan process was pretty painless I did not put 20% down. The interest rate was a little higher.
My experience with a streamlined 203k was pretty horrendous. Considering that the restrictions on the streamlined are supposed to be looser than the non-streamlined... I was sold something vastly different than what a streamlined 203k should have been.
Key points:
- I wasn't allowed to perform any of the work myself. FHA has a "self-help plan" that allows the homeowner to perform some work themselves using the rehab money. The underwriters axed that provision and I was forced to use a contractor for everything. Technically, if I wanted to paint a room, a contractor had to do it. If I wanted to buy a microwave... contractor had to do it.
- Originally I was to provide only a general concept of what I was doing with the rehab money. Appliances could be kept general (just list fridge, $2000, oven $2000, cabinets $10k, etc). By the time the underwriters were through with me, I had to have exact plans and exact prices, down to the penny.
- I didn't receive my first disbursement (which I was told I would receive shortly after closing) until 60 days after closing.
- I didn't receive my final disbursement until 120 days after closing (and more than 45 days after work was completed).
Now, this is mostly a lender problem... but regardless, lenders have the capability of removing all the advantage of a 203k loan... so watch out.
My experience with a streamlined 203k was pretty horrendous. Considering that the restrictions on the streamlined are supposed to be looser than the non-streamlined... I was sold something vastly different than what a streamlined 203k should have been.
Key points:
- I wasn't allowed to perform any of the work myself. FHA has a "self-help plan" that allows the homeowner to perform some work themselves using the rehab money. The underwriters axed that provision and I was forced to use a contractor for everything. Technically, if I wanted to paint a room, a contractor had to do it. If I wanted to buy a microwave... contractor had to do it.
- Originally I was to provide only a general concept of what I was doing with the rehab money. Appliances could be kept general (just list fridge, $2000, oven $2000, cabinets $10k, etc). By the time the underwriters were through with me, I had to have exact plans and exact prices, down to the penny.
- I didn't receive my first disbursement (which I was told I would receive shortly after closing) until 60 days after closing.
- I didn't receive my final disbursement until 120 days after closing (and more than 45 days after work was completed).
Now, this is mostly a lender problem... but regardless, lenders have the capability of removing all the advantage of a 203k loan... so watch out.
I'm closing on a 203k Streamline next week. I've been trying to close since July. I recently found out that I won't be getting my first draw at closing. Sigh....misinformed again by the broker. Wanting to get a jump on the draw process I called to inquire and found out that I need a permit first - well - in my county for the work that is being done I don't need 1. I had called the county when I was doing my feasability to makesure I considered county permit fees - they said to check with the contractor - they will know. The contractor said not needed this is replacement work with the demolition already completed. The lender said call the county I said my contractor said they aren't needed then they said you can't trust the contractors. For the love of Pete!
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35K Limit
