An FHA 203K loan is often selected by home buyers or those wishing to finance improvements to their current home. Clients might plan a new kitchen or new baths or even hardwood floors to replace carpeting for example. In other words major improvement projects. But a 203K can also be used to finance more overlooked or minor issues that most any home may have.
Below are conditions some many consider minor and a few not so minor that may be reason to use a 203K to refinance your current home to fix all these in one project or if buying a home to make it safer and secure to occupy.
Every 203K will involve doing an appraisal on the home, even as a refinance of the home you own today. The Appraiser will review a Contractors proposal defining the specifics and cost of all improvements planned in order to arrive at the “future as completed value” of the home used to approve the 203K loan. The conditions below you may not be aware of that the appraiser will be looking for to make sure the property meets HUD minimum property standards and will required to be included in the improvements in any case. While this list may not be all inclusive, using a 203K to address these items may be all you need to bring your home up to a level that is safe and healthy to use without doing a major renovation.
- Peeling or chipping paint
- Any signs of mold or mildew
- All windows freely open and close
- Missing electrical fixtures, switches/outlets and switch/outlet plates
- Missing flooring, including missing tiles
- Flooring that is in disrepair or heavily soiled
- Handrails if there are more than three steps
- Approximate remaining life of the roof (there should be at 2 least years)
- Hot water heater – equipped with a relief valve to the floor
- Water stains on walls and ceilings
- Well/septic – separate inspection- highly recommended
- Missing bathroom fixtures and/or cabinet doors
- Foundation issues– if present, you will need to use the 203k Full renovation program
- Missing/nonfunctioning gutters and/or downspouts
- Missing screens on windows
- Missing kitchen fixtures and/or cabinet doors
- Damage to the exterior of home including soffit, fascia and siding
- Utilities should be turned on and checked for operation
- Adequate caulking and weather stripping on doors and windows
- Missing built-in appliances
- Dampness or water in basement
- Signs of termite damage
- Exposed wiring
- Missing door knobs
Many times a home just needs the basics fixed that affect health, safety, security and sanitation. Then later the major projects can go forward. Any loan can be refinanced with a 203K or a HomeStyle renovation loan in the future to complete “Phase Two”, even an existing 203K.
I hope this post has been helpful and encouraging to those that may have thought a Renovation project was too complex or beyond their ability to manage. My intent is always to inform, educate, and generate discussion. Please call me or email me directly or visit my website for more information on renovation loans. I welcome your comments and questions!