Cut the paperwork with a streamlined 203(k) loan - 02/07/12

The myriad loans available to homebuyers seeking to buy and renovation a house can be daunting. One way the federal government – and RenovationReady™ -- makes that process easier is by offering a streamlined 203(k) loan.

As the federal government acknowledges:
"The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased."

The streamlined loan covers light repairs. Unlike the 203k loan, the streamlined version does not require homeowners to hire licensed architects, contractors or engineers. The streamlined 203k loan involves significantly less paperwork than the non-streamlined version. Loan rates can be adjustable or fixed. The renovation coverage has a $35,000 cap, and anything above $15,000 requires the homeowner to provide an inspection that proves the construction work was completed. The loans are not limited to a specific housing type or geographic area.

Projects covered by a streamlined 203(k) include:

• Roofs and gutters
• Heating, venting and air conditioning
• Plumbing and electrical
• Minor kitchen and bath remodels
• Flooring and painting
• New windows and doors
• Improving energy efficiency
• Adding a deck, patio or porch
• Buying new kitchen appliances or a washer and dryer

A homeowner might use a streamlined 203k loan to install a new shower and toilet for $5,000. The loan could also cover replacing an outdated kitchen several decades old at an expected cost of $30,000. There are some additional closing costs and mortgage insurance requirements. But if it sounds like a streamlined 203k might work for you, RenovationReady™ can work with you to procure one.

Have questions? Learn more about how RenovationReady™ helps homebuyers and homeowners navigate the renovation process.