4 Steps You Can Follow for Successful FHA 203k Loan Transactions
As the nation’s housing stock has aged, the FHA 203k Rehab loan has gained popularity. It enables the homebuyers to cover the repair cost and purchasing in a single loan. Federal Housing Administration supports the 203k loans. As a result, mortgage lenders are willing to move forward with the loan process for the property they otherwise wouldn’t touch.
How can you prepare for the Rehab loan? The following are the steps that will help you in successful FHA 203k loan transactions.
Step 1. Pre-approval
Getting the pre-approval from an experienced 203k lender in MA is the first thing that you need to do. The lender should have experience in executing the FHA 203k mortgage process. You also need to check the closing history of the lender for the rehab loan. The mortgage lender should also be able to identify and guide you through the complexity of the additional paperwork.
Step 2. Homework!
The mortgage lender will do the work for you. However, you should spend some time on research to get a rough estimate of necessary and desired repairs. Knowing the amount of work that you need to do and the estimated cost can help you plan your initial offer price.
Step 3. Negotiate on Sales Price to Create your Equity
The original sale price of the home determines the equity. Make sure you do not bid too high as the property should have the value high enough to include the cost of repairs. It is recommended to visit the property site a few times and take your contractor at least once to get an idea of the negotiation value.
Step 4. Be Prepared Early in the Process for Smooth Closings
Make sure you get the scope and the cost of the repairs from the consultant, contractor, and the lender at the initial stage. Getting the repair estimation will not only save time, but it will also ensure a smooth closing. Thus, you need to be pro-active throughout the process.
Getting the 203k rehab loan often requires time to complete the process. There might be additional paperwork involved at times. Our loan officers at Drew Mortgage Associates will guide you throughout the FHA 203k rehab loan process. If you are ready to get started, contact us!
Read the Guidelines and Requirements for 203k Loans in Massachusetts