The challenge for buyers searching for the perfect home is usually the price tag that comes with it. We might have the solution for someone willing to see potential in a home in need of a little love and some rehabilitation. Our FHA 203(k) loans offer the convenience of a loan providing the money a buyer needs to purchase the property and the funds required for the repairs. The entire process from finding a home to completion of its rehabilitation is a simple one.
Find the home and make an offer
FHA 203(k) loans make it easier to find a home because it allows buyers access to homes that might be out of their price range were they not fixer-uppers. Once a home is located, the following steps take place:
- Buyers make an offer through their real estate broker or agent.
- Contracts are signed with the seller containing a contingency clause making the purchase subject to the buyers being approved for an FHA 203(k) loan in the amount needed to complete the purchase and any repairs required by the mortgage lender or by the FHA.
- Buyers meet with a representative from MortgageDepot to complete an application through an FHA 203(k)-approved lender. The application includes a proposal and detailed estimate of the scope and cost of the repairs.
- The lender arranges for an appraisal to establish the projected value of the property after the repairs.
Our trained loan officers work closely with the lender and the buyers throughout the underwriting process that ends with a loan approval covering the cost of the purchase, the repair work and a contingency reserve to cover additional costs not covered by the original proposal and estimate of costs. For buyers who will not be occupying the home during construction, we can arrange to have up to six mortgage payments included in the cost of repairs.
Closing on the loan and the purchase
The closing is when title passes to the buyers after the seller is paid. The funds remaining from the FHA 203(k) loan are held in escrow to pay for the repairs. Money is released from escrow to a contractor at the completion of predetermined stages of work with 10 percent of each payment held until the lender checks to ensure no liens were filed by contractors or subcontractors.
MortgageDepot has the solution
We take the challenge out of financing the purchase of a home in need of some work with FHA 203(k) loans.