Fixer Upper Loans 203(k)
The 203(k) loan is a HUD/FHA-guranteed loan that provides funds for the purchase and renvation of a home. A 3.5% down payment is required with loan limits from $271,000 to $729,750 for 15 or 30 year mortgages.
Here is an example of how it may work on a home that costs $150,000 that needs $35,000 in repairs. An FHA approved appraiser would estimate the cost of the necessary improvements and the buyers would secure bids from licensed contractors before finalizing the loan. Then the buyers apply for a mortgage plus the cost of the repairs up to $35,000. The $35,000 is put in an escrow account and paid out to contractors as the work is completed. The repairs must be completed in 6 months. If the repairs end up costing less that the $35,000 the remaining escrow funds go straight to the loans principal balance, allowing the buyer to pay off the loan a little earlier.
This is cool stuff especially if you are handy and can do some of the work yourself. Call me for details