Lisa's Blog
Insight to Real Estate News in Jacksonville & Ponte Vedra Beach, Florida
The FHA Remodel Express Loan
Buyers and sellers: Having property challenges?
A high percentage of homes on the market right now are listed as “short sales” or “foreclosure” (bank-owned) properties----and with those can come issues----neglected homes in need of repairs such as new roofs, flooring, windows, etc. Banks selling these properties typically don’t want to invest any money into improvements, but lenders on the other side of the transaction often won’t accept the property in its current condition (a.k.a. “as is”). Even in normal resale listings, sellers are often financially distressed and can’t afford to make additional improvements to sell the home. Unless the buyer has a “cash” offer, those homes have few options to get sold. In response, Wells Fargo Home Mortgage has developed an innovative and easy to understand program to solve these issues. Named the Remodel Express, it’s a simplified version of the popular (yet complex) FHA 203k loan, and offers buyers a turn-key solution to homes in need of repair.
Here’s how it works: it’s an FHA limited-repair (non-structural) loan allowing the buyer to purchase and renovate a home utilizing a national home improvement company to do the remodeling. The maximum repair cost is $35,000. The buyer picks either The Home Depot, Lowe’s, or Sears to do the repairs----after evaluating the property, the chosen company prepares a bid for repair/remodeling labor and material costs via a “project coordinator”. Once accepted, the bid is provided to the appraiser so that an “after improved” value can be determined. Work can include the repair/replacement of roofs, HVAC systems, painting, plumbing, electrical, fencing, flooring (wood, carpet, etc.), remodeling of kitchens and bathrooms, windows, appliances, and more. Basically, anything non-structural in nature. After closing, a check is sent to the borrower, made payable to the home improvement company. Repairs have to be made within six months.
The upside? The buyer gets to work with one contractor (selecting contractors can be ime consuming), with a licensed professional, and with a national company that has the financial resources to complete the job and stand behind it. The buyer gets savings on materials (national companies often have greater buying power than smaller contractors), and they get to eliminate contractor validation of licenses/insurance. Furthermore, it’s one closing, with one loan, and one pre-determined payment.
Is this innovative loan product going to singlehandedly revive the housing market? Not by a long shot….but it will certainly fill a much needed niche to move otherwise unsellable homes.
What Others Are Saying
Mark Sitton, on 11/29/2009, said:
I am a remodeler in the ponte vedra area and here in my wed site to look at
http://www.gotremodeling.com
as, on 01/07/2010, said:
thanks for your info.
CASYGENEUSY, on 01/08/2010, said:
Bookmarked this. Thanksgiving owing to you after sharing. Positively advantage my time.
Elvis Royle, on 08/24/2010, said:
Since I am not working on commission, I am going to give you some HARD advice.
Don’t take a bad situation and make it worse.
Your house is not an ATM card. Refinancing to pay off your car and credit cards DOES NOT save you money...all it does is decrease the equity in your home and stretch your payments out to 30 years...so you’ll be paying QUADRUPLE what the debt was originally worth.
Plus you’ll be paying about $3,000 in closing costs (at minimum) refinance $10,000 worth of debt ????? That’s crazy!!!!!
You are refinancing the ENTIRE loan to work in $10,000. Do you realize that?
Here is a better solution: Both of you work a part time job of 15 hours per week and have the ENTIRE proceeds of that extra job go towards that $10,000.
Start with the debt that is costing you the most, pay that one off FIRST, then start with the NEXT highest one.
You’ll be able to do it in less than 1 year, you won’t have to pay closing costs, you keep your equity.
Win-win, all the way around.
But please, DO NOT do this!!!!!!
PS: With FHA you MUST pay PMI for a MINIMUM of 5 years REGARDLESS of how much equity your have!!!!
Total waste of money when you already have a fixed rate loan!!!!
PSS: Don’t get a home equity loan either...all you are doing is taking a car and credit cards (that you could technically bankrupt if you absolutely had to) and using your house as collateral, which means a lien instantly gets put on your house for the same debts. (b/c the HELOC is a SECOND MORTGAGE))
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