You are thinking about buying a home foreclosure on Long Island, but the properties you are looking at need serious rehabilitation.

What Can You Do?

You may want to apply for an FHA 203(k) restoration loan through an approved lender!
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.

HUD's 203(k) program can help you overcome this obstacle by enabling you to purchase or refinance a property plus the cost of making the repairs and improvements in one mortgage. The FHA-insured 203(k) loan is provided through approved lenders nationwide and is available to persons wanting to occupy the home.

The downpayment requirement for an owner-occupant (or a nonprofit organization or government agency) is approximately 3.5% of the acquisition and repair costs of the property.

The 203(k) loan includes the following steps:
A potential homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with his/her real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.

The homebuyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.

The appraisal is performed to determine the value of the property after renovation. If the borrower passes the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.

At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.

Escrowed funds are released to the contractor during construction through a series of draw requests for completed work. To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines their will be no liens on the property. It is essential for a borrower to select a general contractor (restoration company) that is familiar with the 203k loan process, including the required forms and documents.

Streamlined 203k Loan
FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.
___________________________________________________________
Advanced Restoration Corporation is a full-service property restoration contractor with the ability and 203(k) knowledge to provide complete Rehabilitation & Restoration services to your new home or refinance! We service the New York Metro area (Nassau County, Suffolk County and the NY Boroughs).

For more information about 203(k) loans and mortgage professionals authorized to generate FHA 203(k) loans, please contact Gary Matzelle at (516) 903-4107.

What are Streamlined 203(k) Loans?

Foreclosures continue to dominate the real estate market and as a result, many homes are left in disrepair. If you are contemplating the purchase of a foreclosure requiring minor repairs, you may want to consider a "Streamlined" 203(k) loan. The Streamlined (k) Limited Repair Program was developed to augment FHA’s existing Section 203(k) rehabilitation program for less extensive repairs and improvement.



What improvements are eligible under the Streamlined 203 (k) program? The Streamlined (k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required.


The Streamlined (k) program includes the discretionary improvements and/or repairs shown below:

*Repair/Replacement of roofs, gutters and downspouts

*Repair/Replacement/upgrade of existing HVAC systems

*Repair/Replacement/upgrade of plumbing and electrical systems

*Repair/Replacement of flooring

*Minor remodeling, such as kitchens, which does not involve structural repairs

*Painting, both exterior and interior

* Weatherization, including storm windows and doors, insulation, weather stripping, etc.

*Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens

*Accessibility improvements for persons with disabilities

* Lead-based paint stabilization or abatement of lead-based paint hazards

*Repair/replace/add exterior decks, patios, porches *Basement finishing and remodeling, which does not involve structural repairs

*Basement waterproofing

*Window and door replacements and exterior wall re-siding

*Septic system and/or well repair or replacement


What are the minimum and maximum amounts for repair costs under this program? Given the need for homeowners to make minor repairs without exhausting personal savings, and in consideration of the increasing cost of materials, the minimum repair cost of $5,000 is eliminated and the ceiling is now raised to $35,000. This revised maximum repair/rehabilitation amount recognizes the cost of making older homes more energy efficient. When the repairs exceed $15,000, the mortgagee must perform or obtain an inspection to determine that all listed repairs were completed.

Can this program be used for repairs and improvements on purchases of HUD Homes? Like the regular Section 203(k) program, Streamlined (k) may be used for single-family housing sold by HUD. REO properties that have been designated by FHA’s Management and Marketing contractor (M&M) as “insurable” with repair escrow ($5,000 or less in required repairs) or “uninsurable” (with more than $5,000 but no more than $35,000 in required repairs) are eligible for the Streamlined (k) program provided that the repairs qualify as eligible work items as outlined.

If you are looking for a real estate professional on Long Island that is familiar with 203(k) loans and specializes in foreclosures, please conatct Mark P. Martin at Island Advantage Realty. Contact information for Mr. Martin is as follows- Telephone: (516)238-5498; Email: mmartin2@optonline.net.

_______________________________________

Advanced Restoration is a full service property damage restoration company that specializes in the 203(k) rehabilitation & restoration of homes and businesses. The company is family-owned and operated with a combined 75 years experience in dealing with Fire Damage Restoration, Water Damage Restoration, Flood & Storm Damage, Mold Remediation, Smoke Damage Restoration and Reconstruction. We service Long Island (Nassau County, NY; Suffolk County, NY) and the New York Metro area.

For more information on how Advanced Restoration can partner with you, please contact
Gary Matzelle at (516) 903-4107, or send an email to gmatzelle@advancedrestoration.com. Please visit our Website: http://www.advancedrestoration.com/

Buying a Foreclosure That Needs Repairs?

Foreclosures in Nassau County, Suffolk County and the NY Metro area continue to increase due to the struggling economy. As a result, homes become neglected over time and develop situations that subsquently require a restoration company to perform repair work related to water damage, mold and many other structure situations. Initiating necessary foreclosure repairs for a property can be accomplished by a homeowner applying for a mortgage related to the 203(k) Program.

203(k) Mortgage

The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs like a 203(k) mortgage. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. These lenders fund the mortgage loans which the Department insures. HUD does not make direct loans to help people buy homes.

One Mortgage Loan

When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods.

The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established.

It is important that a qualified restoration contractor familiar with the 203(k) program is selected to conduct the restoration process.

_____________________________________________

Advanced Restoration Corporation is a full service property damage restoration company that has the abiltiy to execute all necessary repairs to a property that qualifies for a 203(k) loan.
For more information on FHA 203(k) loans and how Advanced Restoration can partner with you, please contact Gary Matzelle at (516) 903-4107.