203k/construction loans and Title V

[chiver78]

I've got a call out to a mortgage broker, but thought I'd ask here too. is anyone familiar with 203k home loans? they are intended to allow a prospective buyer to borrow more than the assessed value in order to fix up the home to a livable state. apparently, even cosmetic improvements qualify for this loan. what I'd like to know is, does a failed Title V qualify? I'm looking at a short sale listing that has failed TitleV. there's a note in the listing that the engineering work has been done and will be handed over at sale. that's the expensive part, as best I know - you are paying for that PE stamp on the drawings. if I can snag a 203k loan to re-work the septic, the rest of the property looks to be in great shape.

[Deleted]

Here's a link to the FHA 203k site. It says septic qualifies but under repairs that are ineligible are repairs which require plans or which could take more than 30 days.

www.fhainfo.com/fha203k-streamline1.htm

I would talk to a loan officer who is EXPERIENCED with the 203k program. If you already have approved plans maybe it will qualify. I think their concern is that the plan checking process could take months and you wouldn't be living in the house for at least 30 days.

[GrayCat]

I actually just completed a 203k loan on Tuesday.

We bought a house that was appraised at 200k for 165k. We had 17k available for repairs, per bids from the contractors we chose.

Here are the repairs we made to the property:
Septic sand filter clean & repair - the septic system was in constant alarm before the repairs, so the property was "unlivable" according to the appraiser. We lived in it anyway. The location of the tank downhill from the house prevented backups in to the house so we didn't worry about it.
Roof replacement - we had 65% of the roof replaced due to massive leaking and water damage.
Siding replacement - the damaged roof caused the siding to warp and mold.
New front porch - old one was rotten from constant contact with the ground.
Vegetation removal - the appraiser called this out. We mowed the overgrown lawn and called it good. That was all he wanted to see.
Install dishwasher - the prior owners had stolen the last one when they moved out.
Install new carpet - old carpet was moldy & coated in dog pee.

We came in under budget by doing all the repairs ourselves except the roof, so we had extra money left over...

With that extra money we replaced the range hood, stove top, laundry room & bathroom floors and water heater.

What we are left with is a fully renovated house worth about $250k that we owe $182k on.

Win.

It was very hard, but worth it. Our bank always paid our contractors quickly, and also disbursed payments to us somewhat quickly.

[Deleted]

Great story, Gray cat!

[chiver78]

thanks for sharing, GrayCat! your story sounds like what I'm looking to do. I'd be doing a lot of the work myself, except the septic stuff. good to know you were able to use 203k funds for septic, that's making me feel better about the possibility of doing it that way myself.

obviously, I need to check for sure with a lender in my state.