So you find the home that really fits everything in your list – location, size, price range – except it needs a few upgrades or repairs. Conventionally you would need to be able to (a) get the house approved for purchase even with the necessary repair, (b) be able to fund the repairs out of pocket and (c) deal with the entire transaction with a lender who knows little or nothing about rehab purchases. Problem solved if I may be so bold.

Play this short audio file for more information.

If you are purchasing a home Georgia that needs $35,000 or less in rehab this is a simple loan to close. It does require good to excellent credit, 3.5% down of the purchase price plus the rehab amount, steady income and no foreclosures in the last 3 years, as well as a couple of other lesser qualifying points. It is available only for owner occupied properties and condominiums that have been or can be FHA certified.

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Regardless of the industry there are certain buzzwords or words that seem like they are created simply to confuse the outsider. Near the bottom of the list for business goals should be confusing customers. Unfortunately it does happen and the one who stands the highest chance for damage is the most valuable of all; the customer.

Mortgage professionals throw around terms like an alphabet soup that would frighten even Vanna White. Words like ten oh three (1003) and respa (RESPA – Real Estate Settlement and Procedures Act) fall out of their mouths like jelly beans out of a pinata.

Making it even a little more confusing for you different agencies use the same term to apply to different meanings and vice versa. Streamline and streamlined for example.

The Federal Housing Administration (FHA) makes available a couple of different “streamline” loans. Freddie Mac (FHLMC) has their “streamlined” loan. Essentially they are the same product and if you phone an FHA lender and ask for a “streamlined” loan they will neither laugh at you nor hang up on you.

For all practical purposes streamline loans, whether a streamline refinance or otherwise, indicate something less is required or they go faster than a standard loan. For the FHA streamline refinance a little less documentation is required and sometimes less evidence of value is required.

Streamline refinances from FHA are available in two distinct offerings. One version of the FHA streamline refinance does not require an appraisal to be performed and requires more documentation about the borrower while another version of the FHA streamline refinance does require an appraisal on the property but less documentation on the borrower. Lender rules may overlap or augment FHA insurance requirements.

Offered also from FHA is the FHA 203k streamline loan for properties being purchased or refinanced and the loan including rehab or upgrade costs. The FHA 203k streamline loan does require all of the normal borrower and property documentation but because the upgrade or rehab costs are limited to thirty-five thousand dollars the loan process itself is less complicated than for a full FHA 203k which allows a higher amount of rehab.

Veterans can take advantage of the Veterans Administration’s Interest Rate Reduction Loan (IRRL). Like most other streamline loan types the VA IRRL require less documentation and can, usually, be closed a little more quickly than other types of loans.

The best way to find out about the streamline loan which is best for your needs, if you and your property qualify for a streamline loan and any other particular questions to be answered about a streamline loan for you the best way to get answers is to contact a seasoned mortgage professional in your area.

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January 28, 2010

Home buyers and home sellers across America have a friend and ally they may not be aware of. For many buyers the “perfect” location may not be the “perfect” home. Due to the recent downturn in the economy, which many agree will level out this year in spite of Congress’s best efforts to destroy it, there are many homes for sale either by private owners or lenders who have taken?possession.

Real estate owned is the common term for bank owned properties which many investors are well familiar with as REOs. The foreclosing lender rarely, if ever, will perform any upgrades or maintenance to the average home before putting it on the market. For buyers with 20% down and plenty of cash to cure the issue this is not a major concern. However with the increasing number of buyers using FHA for their fairly liberal 3.5% down payment this is an issue.

FHA guidelines do not allow a property to be purchased as is where the property needs repairs. Cold damaged plumbing or out of code is a major concern for FHA buyers.

Meet the FHA 203k Streamlined Rehab/Purchase Loan

The key asset of the FHA 203k Streamlined is that it allows the buyer to finance in the cost of repairs up to $35,000. The loan includes the sale price plus the rehab and the total cannot exceed the FHA maximum loan amount for the area in which the property is located.

Repairs covered by the FHA 203k Streamlined loan can include cosmetic repairs, improvements that do not involve structure (such as adding on a room), plumbing and electrical upgrades, and other repairs and improvements. They cannot include landscaping or additional living space.

Finding a home in your price range, in the neighborhood where you want to be, with the styling you desire, and with your person touch is all but impossible unless you have a home built. Then that price range thing has a tendency to get in the way. Enter the FHA streamline 203(k) home purchase and renovation program and you’ve got a very good shot of getting exactly what you want.

Take Sarah and Lee for example. They are purchasing a duplex in a wonderful southern neighborhood which needs about $30,000 in rehab and upgrades so the FHA streamline 203(k) is ideal for them. They still get the same low FHA interest rate but the costs of the renovation are financed into the loan meaning they only need the 3.5% down payment on the total loan amount.

The FHA streamline 203(k) also works for first time home buyers and works in conjunction with the Energy Efficient Mortgage and even works with the HUD $100 down payment program. Below are a few answers to questions about the FHA streamline 203(k) loan program:

You may do the work youself if you have verifiable work experience in that field but you may not be compensated for the labor only the materials.

Appliances may be financed with the FHA streamline 302(k) – they may also be financed with the Energy Efficient Mortgage (EEM).

A Cost Consultant may be required and could be well worth the investment. They help make sure your General Contractor is charging fair and going rates for material and labor costs.

Draws are available only according to the schedule set forth by the FHA streamline 203(k). If your General Contractor asks for more money from you do not give it to them. They will be paid on draw by the lender when the work is completed.

Make sure your General Contractor is reputable. If any suppliers or sub-contractors put a lien agains the property during the construction period the final distributions will not be made.

For more information about the FHA streamline 203(k) for Georgia and Florida homes call 866-946-0110 extension 101 or email me at

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