F.H.A.  203(k)
RE-HAB

Purchase or Refinance

CREATE the home of your dreams!

What is an FHA 203(k) RE-HAB Loan?  It is a loan that allows a customer to purchase a home in need of repairs AND finance the costs to improve that home to the customer's desire and FHA requirements. 

-Total Loan Amount = Purchase price + improvement cost
-COSTS:  3% Down (based on total loan amount) + Points and Closing Costs
-Owner Occupied only, you must live in the home.  No Investor's allowed.
-Finance up to 6 months of mortgage payments, if property is uninhabitable.
-Contractor must be approved.  Alliance has a list of approved contractors.

What can you do?

1. Structural repairs and alterations.
2. Update Kitchens and/or Bathrooms
3. New doors.
4. Exterior siding
5. New Roof
6. Replace Heat-Air-Plumbing-Electrical
7. New Carpet-Hard wood flooring or tile.
8. Major Landscaping
9. New Appliances:  Refrigerator, range, washer/dryer, dishwasher, microwave oven, etc.
10. Painting and other cosmetic repairs.
11. Repair of a swimming pool, must be less than $1500.

Can NOT do:  new swimming pool, hot tub, etc.  Must be attached to the house.

IT'S EASY!
1. Customer applies for a loan with Alliance Financial in Toms River, NJ

2. Customer to supply Alliance Financial with Contract of Purchase on the home and customer estimation of needed repairs to improve the home.  Contract should be contingent upon approval.  Seller should allow inspectors, contractors and HUD consultant access to the property.

3.  Within 7 days, buyer should obtain a property inspection and termite report to make sure there are no unforeseen problems.

4.  Borrower meets with FHA consultant at the property.  Consultant will inspect the property and determine what repairs are needed to meet HUD minimum property requirements.  Borrower will indicate any work they wish to have done at this time to the Consultant.

5.  HUD Consultant will provide a Work Write Up for the project and provide copies to Customer (who will give to contractor), Alliance and Appraiser.

6.  Borrower will take Consultant’s Work Write Up and find a Contractor.  Contractor can NOT be the customer or a relative of the customer.

7.  Appraisal will be ordered as the borrower obtains contractor bids.  Appraiser will perform an "after-improvement” value.

*Contractor estimates and Consultant findings must match dollar for dollar

8.  Contractor of choice to provide insurance, license and resume with list of references.

9.  Fee’s:

            a.  Contingency Reserve (minimum of 10%).

             b.  Inspection and Title Update Fees

                        -5 inspection fee’s (appraiser) of approximately $100 each

                        -5 Title update fee’s of approximately $100 each

             c.  HUD Consultant Fee:  Alliance recommends John Minor 908-322-2555.

                        Fee depends on Cost of Repair

                        <  $7,500        $400

                        <  $15,001     $500

                        <  $30,001     $600

                        <  $50,001     $700

                        <  $75,001     $800

                        <  $100,000   $900

                        >  $100,000   $1000

             d.      Supplemental Origination Fee (1.5%)

 e.      Permits or other Fees

             f.        Architectural and Engineering professionals might be needed for some projects.

 g.      All costs and fees are including in the Total Cost!

 10. Alliance figures out the minimum required down payment required by the customer.

11. Alliance obtains the Consultant cost write-up, builder plans, architect plans and appraisal.  We will process the file and submit it to the underwriter for approval.

12. Loan closes, customer starts paying the mortgage.

13. Construction starts, draws are paid.  Underwriter coordinates with the Builder during the process.

For more information and/or to start work on your FHA 203(k) RE-HAB loan today, please call.

DAN PALUMBO, Licensed Mortgage Banker
1-800-817-8743