Buying A Home In As-Is Condition

Buying a home in as-is condition to many home buyers is scary thing.  Many people want homes in move in ready condition and make things simple.  But what if you get a good value on an as-is property?  Maybe there’s a broken window, or missing toilets or holes in the wall?  A lender will not normally loan on that property at all, those are health and safety issues.   But what if everything is in tact but the house looks like a scene from an old 1950’s t.v. show?  What if you are getting a good deal but just don’t have the funds to update the home?

Fortunately the 203k loan is available for both of these situations. Whether you have broken windows, or an undesirable yellow kitchen the 203k Streamline gives you up to $35k in remodeling funds to update/remodel and fix the health and safety issues.  You can even get new appliances with the funds as well.  You receive these funds in addition to your purchase loan it’s all included in one low 30 year fixed rate loan.  The 203k Streamline loan is an FHA loan and is not meant to fix structural issues, it’s meant for more cosmetic items.  But cosmetic covers a wide variety of things including electrical problems, appliances, countertops, cabinets, carpet, paint, roofing, air conditioning units and the like.

The 203k Standard loan does the bigger jobs.  Maybe you want to add a bathroom or a bedroom or garage.  Those items are structural in nature but they can be handled by the 203k Standard loan, and again the repair funds are added to your purchase money loan as well so it’s all in one 30 year fixed rate low rate.

All the repairs and remodeling projects are done after escrow closes, so you can buy the home in as-is condition.  It’s one of the only loans available that does this and in our current real estate market, the 203k loan is gaining in popularity and is helping cash strapped home buyers acheive their dreams of owning a home.

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Best

KW

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10 Comments

  1. Posted August 20, 2011 at 9:03 am | Permalink

    Great article on 203k loans, Kevin! You way of explaining it in very simple and understandable terms has been really helpful. I’m a newbie in the industry and I have been quite overwhelmed with all the jargon I come across with online. Glad to have stumbled upon your site!

  2. Posted August 21, 2011 at 1:11 am | Permalink

    I am a real estate agent doing a 203k loan right now and they are really fantastic. I love the wide range of improvements that are allowed to be made on a home using this program, right down to new paint and flooring.

  3. Posted August 22, 2011 at 5:21 am | Permalink

    Glad to see a SoCal Realtor is embracing the 203k. I wish you the best Susan.

  4. Posted August 22, 2011 at 5:25 am | Permalink

    Just made my day with that comment, thanks!

  5. Posted September 8, 2011 at 8:11 pm | Permalink

    Is there any data that gives you an average age of home-to remodel cost comparison which would show what the optimal age of a home gives the best value?

  6. Posted September 8, 2011 at 8:12 pm | Permalink

    Be wary of getting in over your head with repairs. In my experience you are always twice as busy as you think you will be.

  7. Posted October 17, 2011 at 10:33 pm | Permalink

    How do you calculate how much the repair cost will be? Is there a minimum that you should have in mind?

  8. Posted November 17, 2011 at 8:11 pm | Permalink

    To calculate how much the repair cost will be you’ll it depends on which type of loan you’re going to do, the 203k Standard (does big jobs like room add-ons) or the 203k Streamline which does more cosmetic work. If it’s the 203k Standard, you’ll need to get a contractor to do a walkthru of the property and you tell them what you want done and they’ll give you a bid. The bid will be checked by a HUD Consultant as well to make sure it’s in line with market rate as well as making sure there aren’t any health and safety issues that may have been missed in the bid. If you’re looking at the Streamline, you’ll still need a contractor, but not the HUD Consultant.

  9. Lisa B.
    Posted April 23, 2012 at 2:23 am | Permalink

    Hi Kevin,
    I am considering purchasing a home listed on land contract. It sits on a decent piece of land but the house is in pretty bad shape. The roof is collapsing and it’s not even livable currently. The owner owns a contracting company and he gave me an estimate of $45-$65,000 to rehab and said this would be a new home from ground up. The cost obviously would depend on any upgrades etc. He is willing to accept a small down with monthly payment or sell whole thing outright for a reduced amount. Would this qualify if I owned on contract or would I have to own the property outright. Is this even a situation that would quality for 203K loans? Thank you.
    Lisa

  10. Posted November 30, 2014 at 2:29 am | Permalink

    All of these perks make the veteran loan a very attractive home-purchasing tool.
    In 2011 just under 40% of all mortgages used to purchase a home nationally where FHA Insured Mortgages.
    Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and
    protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and
    strengthen the overall economy of our nation. Income eligibility –
    FHA loans are open to nearly anyone who wishes to be considered
    for a loan. These funds can be used for down-payment assistance,
    closing costs (or offset), even cash back.

2 Trackbacks

  1. […] when I go out to a house to assess it for a homeowner who is considering borrowing funds under the 203k loan program, my inspection has a very specific focus.  My main goal is to inspect the property to see […]

  2. […] when I go out to a house to assess it for a homeowner who is considering borrowing funds under the 203k loan program, my inspection has a very specific focus.  My main goal is to inspect the property to see […]

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