When some people see an older home or a home in poor condition, the first thing that they think is eyesore. However, at California Mortgage Advisors Inc., we know that some people see a home in need of repairs, and they think about a project. Not every dream home comes already assembled. Some require hard work and dedication.
At California Mortgage Advisors Inc., we fully support the do-it-yourself spirit by providing customers with FHA 203k loans. Whether customers are looking to make minor upgrades or embark on a quest of total renovation, CMA is there to provide them with a FHA 203K loan solution to complete their home upgrade journey. For any questions about your 203k loan feel free to contact a Mortgage Advisor at (800) 927-6560.
What is a FHA 203k Loan?
A FHA 203k loan is a traditional mortgage combined with additional funds added on specifically to make home repairs or renovations. However, it is still a government-backed FHA loan which means obtaining a 203k loan may require a little extra paperwork and upfront documentation. CMA Mortgage Advisors will work closely with the borrower to ensure that the result of any 203k loan is exactly what the consumer envisioned.
203k Consultant Loan
Often called a “regular” 203k, the consultant loan is for homes that require structural repairs, work on the foundation or significant amounts of general repairs and renovations exceeding a total of $35,000. The loan functions exactly like a traditional government-backed FHA loan with a few additional requirements and steps.
FHA approved 203k Consultant.
Borrowers will be required to select and hire a consultant from a list of FHA approved consultants in their geographic region. The consultant is necessary for several steps during the application and loan disbursement process.
Work Write Up.
One of the main jobs of the consultant is the completion of a complete work write-up and feasibility study. This includes working on cost analysis, project specifications, contractor proposals, completion of the required draw forms and preparation of lender required packages.
After the 203k loan has closed, the portion of the loan allocated for repairs or renovations is placed by the lender into an escrow account. The money will then be released to the general contractor according to a previously completed draw schedule. Before draws are transferred from the escrow account to the general contractor the borrower’s 203k consultant will inspect the contractor’s work, checking for deadline completion and work quality.
One problem that many people face when obtaining a 203k loan is that after the loan has closed they are placed in a situation in which they are making mortgage payments on a home that is uninhabitable during the duration of the repairs and renovations. Thankfully, up to six months of mortgage payments may be included in the renovation portion of a 203k loan.
203k Streamline Loan
The 203k streamline is most accurately described as a loan designed for basic home repairs, for replacing old or damage portions of a home, or simply upgrading outdated home systems. This type of 203k loan is designed for homes that do not require major structural or foundation repairs. There is no minimum amount associated with these types of projects. However, the maximum amount receivable is capped at $35,000.
As the name implies, this type of 203k is a quicker and easier option when compared to a regular 203k loan. The main reason for this is that unlike the regular 203k, it does not require the use of a general contractor or a 203k consultant. However, it does require a feasibility study to be conducted.
While a 203k loan is straightforward in intent, the logistics of the loan and volume of paperwork required can be overwhelming at times. California Mortgage Advisors Inc. attempts to simplify the process for borrowers as much as possible. Our Mortgage Advisors are committed to working with borrowers, FHA consultants, and general contractors in whatever capacity is required to ensure borrowers can transform their home from a project to a reality.
At California Mortgage Advisors Inc., we genuinely believe that we offer our customers the best mortgages in the industry. We have offered a variety of loans since 1993, which means our Mortgage Advisors have successfully matched tens of thousands of borrowers with loans tailored to meet their needs and unique financial situations. Our Mortgage Advisors are available at (800) 927-6560 to answer your questions or click here to apply online.