Monday, April 25, 2011

Things You Can Do With A 203K Loan

Mixed Use properties - You can renovate a mixed use property provided the commercial space represents less than one floor of the structure. The commercial uses cannot affect the health and safety of the occupants.
  •      Home buyers and non-profits that purchase HUD-Owned properties can refinance the property using the 203k within six (6) months of the purchase, the same as if the buyer purchased the property with a 203k insured loan to begin with.
  •      The borrower will be eligible as a first time home buyer without the three year waiting period if they are legally separated or divorced, even if they had an interest in a home with their spouse, provided the individual no longer has an interest in the home.
  •      Non-profits can purchase a property, rehabilitate it and sell it or keep it. If the non-profit intends to keep the property as a rental then they should keep the acquisition and rehab costs at the lowest possible number to increase the cash flow.
  •      If the non-profit sells the property they can take advantage of a unique aspect of this program called the "escrow commitment procedure" which allow them to secure a loan based on the "after improved" value of the property. Once a buyer is located that qualifies the non-profit is relieved of liability on that loan since it is fully assumable and the buyer takes over the mortgage. The buyer comes up with a 5% down payment that can be borrowed from the non-profit or anyone else to complete the transaction. If the buyer takes a second with the seller then it must be a five year note or longer. The non-profit may chose to forgive the second or collect it but in either case the non-profit has received 95% of their money up front. It has been setting in an escrow account since the original loan was funded drawing interest in the non-profits name.