Tuesday, May 16, 2006

Renovate with Your Home Loan

203(k) loan will allow you to obtain a loan for your home and obtain additional loan money for repairs. There are two types of traditional and streamlined.

1) Traditional will only allow rehab work on non-cosmetic repairs. Repairs would include, roof, carpeting, electrical, a/c etc. and repairs have to be a minmum of $5000K. There is no limit on amount borrrowed but has to a loan to value ratio compatible with other properties in the neighborhood. Inspector has to review completed work before contractor becomes paid.

2) Streamlined does allow for some cosmetic work to be repaired, has no minimum dollar amount required, allows more flexibility with payment to contractors, but does cap the loan amount to $35K.

You need to start repairs within 30 days of closing and to be completed within 6 months. To find a HUD approved lender for 203(k) loans. You may visit http://www.hud.gov/ll/code/llplcrit.html or call 1-800-225-5342. Courtesy of Orlando Sentinel 5/14/06.