Have You Heard Of The FHA's 203(k) Program?

It’s an interesting government program that has the potential to make distressed properties look much more appealing to potential buyers.

In California, “sales for 2010 are projected to decrease 2.3% to 527,500 units. Distressed properties are forecast to account for nearly one-third of the sales in 2010” according to C.A.R. Chief Economist Leslie Appleton-Young.

So, that’s approximately176,000 distressed properties that may end up on the California real estate market, often at a substantial discount.

The 203(k) is an FHA-guaranteed loan that provides money to help buyers purchase and renovate a distressed home in need of repairs.
With just one mortgage loan, buyers can buy and repair their home. There’s no need to spend savings or get a remodel loan or open up a line of credit after escrow closes to deal with expensive repairs.

Assuming the property is eligible, buyers would apply for the mortgage, an appraiser would estimate the cost of repairs, the cost of repairs would be added to the mortgage amount and held back in a Rehabilitation Escrow Account in an escrow account to be paid out to contractors as work is completed. All repairs need to be completed within six months of closing.

If the repairs cost less than the Appraiser approved quote, the balance of funds would go toward reducing the mortgage loan.

Log onto http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
for guidelines and much more information on this program.

Here are two Mammoth Lakes lenders, you can contact, with questions on this program:

1. Randi Maier/ Doug Magit, Wells Fargo Home Mortgage, Mammoth Lakes, Ca. 760-924-2270
2. Bank of America. 760-924-4660

Please share your thoughts by leaving a comment or calling me, toll-free, at 1-800-231-0622.

For more information on Mammoth Lakes real estate, please log onto my real estate website at www.easternsierraproperties.com

References:
C.A.R. website. C.A.R. releases California Housing Market Forecast for 2010 Wednesday October 7, 2009.