203k loan - Posted by Shenesa

Posted by Stacy (AZ) on June 23, 2000 at 12:36:08:

Hi Shenesa-

Got to this link for NY 203K info.

http://www.hud.gov/local/nyn/nyns203k.html

These loans are not available for Investors…must be owner-occupied.

Stacy

203k loan - Posted by Shenesa

Posted by Shenesa on June 23, 2000 at 11:30:31:

Can someone please explain to me the 203k loan and its purpose and how do you go about getting one?

Thanks,
Shenesa,NY

Re: 203k loan - Posted by Kenn

Posted by Kenn on June 25, 2000 at 22:38:16:

Basically, you can get your mortgage to include repairs, upgrades, etc.
I just did one last year for our primary residence. I found a HUD house and put in a 56k bid needing 3k repairs. FMV approx. 68k. I decided to do the 203k just for the experience. Because we were going to live in it, we decided to fix it up a little nicer instead of just making the minimum repairs (it was a dump) I made a wish list of everything I wanted. From prior rehabs I knew it would cost 9k. This would push the FMV up to about 76k. By the time I had my list together, got it to the govmt approved contractor, and got the contractor’s quote back, time was of the essence. The contractor came in way more than double my estimate. He would not negotiate and he knew he had me. To make a long story short, I got screwed over, the contractor even boasted in front of me to the HUD inspector how great the money is in doing only 203k’s. Appearantly, because the renovation costs are added to the loan amount and not cash out of pocket, homebuyers do not care or complain. My handymen/crew agreed with my estimates and sugested I report him to the Registrar of Contractors (I never did). O’well, I blew it. I had the money to just buy it on a conventional loan and pay out of pocket for the renovation, but I thought it could be a close to -0- down deal (which it was) and a goof learning experience.
Results:
I have a -0- equity, I have FHA mortgage insurance added onto my monthly payment that I cannot get removed. I have spent several more thousand dollars doing to other stuff I refused to pay the contractor.
I recommend it only if:

  1. you have little cash.
  2. you intend on staying in the home long-term.
  3. You have time built-in to shop contractors (must be FHA qualified).
  4. You understand, like many government programs, everyone involved is going after maximum profit.
    Good Luck,
    Kenn