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What is a FHA/HUD 203(k) loan and what does the HUD approved 203(k) consultant do for you?

You have finally found your Dream Home, But...

It's really going to need a little bit of work... You request through your Realtor that some of the System or Component's need to be Repaired or Replaced... And their only response is - "It's "AS IS" ! ! !

Now your dilemma is, do you accept the home "AS IS" and start pumping additional money from your savings on top of your current mortgage into your new home the day after you move in, or just walk away?

You really need to stop, think and calculate the costs...

** The roof that may need to be replaced in the next year or two - ( $5,000 to $12,000 )

** The Water Heater that is pushing 20 years old and could quit working at any time - ( $800 - $1,200 )

** The Heating and Air Conditioner unit that is also pushing 20 years old - ( $6K to $10k )

** Those old outdated kitchen cabinets and countertops... They are not Cheap to replace... - ( $5,000 to $20,000 )

** New Appliances to go with the new Kitchen Cabinets and Countertops. - ( $5,000 to $9,500 )

(All these costs estimates are ball park figures)


There are other options out there and one of them is obtaining a 203(k) Rehabilitation Loan and having a FHA / HUD approved 203(k) Consultant from Homeland Home Inspectors assist you through the process.


What is a 203(k) Rehabilitation Loan?

In a nut shell, the 203(k) Rehabilitation Loan allows one to combine the purchase and the repairs/renovations of your new home into one mortgage loan payment. The amount you can borrow is based on the appraised value after renovations, not before. With the assistance of a HUD approved 203(k) Consultant from Homeland Home Inspectors, you can determine the repairs/renovations needed and the costs involved in the project. Once you "close" on the property, the repair/renovation funds are held in escrow and released in stages as your repairs/renovations work is completed.


There are two types of 203(k) Rehabilitation loans available:

Limited 203(k) and Standard 203(k)

The "Limited 203(k)" may only be used for: Minor remodeling and non-structural repairs that do not exceed $35,000.

A few of the improvement types under the Limited 203(k) process are:

* Repair/Replace Plumbing / Heating / Electrical Systems / Wells and Septic Systems

* Repair/Replace the Roofing Systems

* Installing or repairing fences, walkways or driveways

* Installing new appliances (Refrigerator, Stove, Dishwasher, built-in Microwave and washing and dryer

* Installing or repairing exterior decks, patios and porches . . .

These are just a few of your options. . . Contact a HUD approved 203(k) consultant for additional guidance.


The "Standard 203(k)" can be utilized for: Major Repairs to include structural repairs and/or alterations.

In addition to the improvement types listed above in the Limited 203(K) process, the following fall under the Standard 203(k) program.:

* Structural repairs/modifications (moving walls, repairing foundations, etc.)

* Repair/Replacement of flooring

* Kitchen remodeling

* Basement finishing and remodeling

* Window and door replacements and exterior wall re-siding

* Painting, both exterior and interior

This is just a short list of repairs/renovations that can be accomplished utilizing the HUD 203(k) Program. . . Contact a HUD approved 203(k) consultant for additional guidance.


The best advice is to do your due diligence.

There is an abundance of information on 203(k) Loan information utilizing the internet search engines.

Discuss your situation with your Realtor and have them explain the 203(k) loan process to you.

You can call and talk to 203(k) Lenders as there are many that handle these type of loans.

Talk with 203(k) contractors in the area that you might hire to conduct the repairs/renovations.

You can also discuss the process with your HUD approved 203(k) Home Inspector / Consultant that you utilize to conduct your Home Inspection.

If you need assistance or direction, please feel free to contact Homeland Home Inspectors concerning our 203(k) Consultant services.