February 2011

Chicago FHA 203k – Are FHA 203k Renovation Mortgages Too Complicated for First Time Home Buyers?

      One of the biggest objections I hear when talking about the FHA 203k renovation loan, is that the mortgage is too complicated. There is no doubt that the Chicago area FHA 203k renovation loan has more moving parts and there is more involved in getting the mortgage approved and closed than is the case with more vanilla mortgage loans. FHA rehab and renovation loans are certainly not for every home buyer or every situation, but the truth is that with the market dominated by short sales and foreclosures, these loans do fit a real need in the market and for the right person and the right property, they can save a lot of money and help you build equity right from the start. But first time home buyers are new to the home buying and mortgage process, and the home buying process by itself can be a…

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Chicago FHA 203k Rehab Loan – How Much Cash Do You Need for an FHA 203K Mortgage?

      One of the great features of the Chicago area FHA 203k rehab loan is that it allows you to buy a home and fix it up or improve it without a lot of cash out of your pocket. The FHA 203k rehab loan, like other FHA mortgages, only requires a 3.5% down payment, that is 3.5% of the full cost of the project which is the purchase price plus the construction costs of repair and improvement, and the required contingent reserve. Here is how this will work: let’s say you are buying a home for $100,000. This home needs work, whether it is repairs which are required before you can close on it or improvements and remodeling to make it a home you are proud to live in. For this example let’s say you will do $25,000 worth of work. Every FHA 203k needs to add in…

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Chicago Area FHA 203K – How Do You Start A Mortgage Pre-Approval for an FHA 203k Rehab Loan?

      An FHA 203k rehab loan is a great way to buy a new home and add in the cost of repairs and improvements at the same time. With an FHA 203k rehab mortgage, you can take a rough fixer upper, and turn it into a home you are proud to own – all with as little as a 3.5% down payment based on the purchase price plus the cost of repairs. One question I get asked a lot is, what all is needed to qualify for this program? Because this program is somewhat unique, and it fits a need that no other loan does, most people think that it is much harder to qualify for an FHA 203k renovation loan than it would be to qualify for a conventional mortgage. The truth is that qualifying for an FHA 203k is the same as qualifying for any other…

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Chicago FHA 203k – How Do You Pick the Contractor You Will Use to Do Your Repairs and Renovations?

The FHA 203k renovation loan doesn’t force you into working with contractors on an approved list, you will be able to pick the contractor yourself. Being able to pick your own contractor means that you can use contractors referred to you by friends or relatives who have had good experiences with similar projects and  you can negotiate for the best price because you aren’t locked in to a list of high cost contractors. You do have a lot of freedom in who you choose, but there are specific requirements that will need to be met, and these requirements are put in for your protection. The FHA 203k direct lender approves the contractors based on specific guidelines and documentation. Here is what is required in order for a contractor to be approved for a Chicago area FHA 203K rehab loan: The contractor will have to complete a profile and include a…

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