Fix Up Distressed Lakeland Real Estate with a FHA 203K Streamline Mortgage

Looking to take advantage of a Lakeland short sale, bank-owned, or otherwise distressed property? Consider a Lakeland FHA 203K streamline mortgage.  It’s a great way to get a good value and some money to fix up your home as well.  First and foremost, make sure you are working hand in hand with an experienced mortgage broker, who is knowledgeable about this program and goes over the costs, time and requirement with you in great detail.

Like many other areas of Florida, the Lakeland, Florida real estate market has been hit pretty hard by foreclosures, leaving many properties in the hands of Banks, which aren’t exactly known for their property management capabilities.  As such, many Lakeland homes for sale as short sales, REOs, bank-owned properties and the like, though offered at a great value, are often in need of minor to moderate repair to be considered “move-in ready.”

I just sold a bank-owned home that was financed with a FHA 203k Streamline Mortgage with the maximum allowable rehab costs of $35,000 where I represented the buyer.  It is not for the faint at heart, it requires organizational skills of the buyer and the buyer’s agent with coordinating the estimation for repairs with vendors who have to meet the FHA guidelines.

Living Room w/o flooring

Kitchen w/o cabinets and appliances

Master Bedroom - no flooring and mold

Master Bath - w/o cabinets - mirror and mold

Enter the Lakeland FHA Streamline 203K mortgage…

The following Q &A on FHA 203K Streamline Mortgages should give you a general idea of how this home loan option can allow you to get into a distressed property at a good value and get up to $35,000 to fix up the property.   You’ll be surprised at the repairs that qualify under the FHA Streamline 203k program.

Q: I’ve heard about FHA 203K Streamline loans, but what exactly are they and how do they work?

A: The FHA Streamline 203k mortgage allows home buyers to purchase properties in need of minor to moderate repair while factoring in some or all of the needed repair costs into the loan.  As long as the repairs on your Lakeland home don’t exceed $35,000 (including fees) and are not structural in nature, you can “refurbish and rehab” the property with the costs built into your mortgage.

Q: Are there cases where the repairs you perform can exceed $35,000?

A: No- the streamline 203k is capped at $35,000 including any “soft costs.”

Q: What exactly are “soft costs?”

A: Soft costs are the those costs that don’t involve repair, but are necessary to close the loan.  These include closing costs  – including up to 2 inspection fees (approx $150/each).  These costs also account for an appraiser compliance inspection report (roughly $125), as well as a supplemental origination fee (the greater of $350 or 1.5% of the rehab costs, and a contingency reserve of 10% – to be determined by the underwriter).

Q:  What sort of downpayment will I need for an FHA 203K Streamline mortgage?

A:  The regular FHA downpayment limit of 3.5% applies.

Q: Are there limits on the types of properties that qualify for this program?

A: Yes, the FHA Streamline 203K mortgage applies only to single family residences, condos, PUD’s and 2-4 unit properties.

Q: Can this program be used to build a new property?

A: No the property must be existing at least 1 year old to be eligible for the streamline 203k.

Q: Is it possible to use this loan on a property for which I will be considered a non occupying co borrower?

A: Yes – the credit piece of this loan is the same as an FHA 203b – standard FHA qualifying

Q: How long after closing will I have to complete the repairs on my Lakeland home?

A: Work on your property has to begin within 30 days of the loan closing, and must be completed no later than 6 months from when your loan has closed.

Q: Is it required that I occupy the home while repairs are completed?

A: You are not allowed to be displaced from the property for more than 30 days during the allowable 6 month rehab time.

Q: Am I allowed to do my own repairs on the streamline 203k?

A: Yes, but only if you are qualified – as in if you work in the construction business, are a licensed contractor, etc.) and you complete the self help forms.

Q: What are the contractor requirements for work being done on a 203K Streamline loan?

A: Contractors are to be licensed and bonded and will need to complete a W9 prior to closing.

Q: What if there are repair funds left over after the work has been done?

A: Any remaining money left over after the work is completed will be applied to your principal mortgage balance.
As I said, if you’re looking to take advantage of a bank-owned property that is in need of repair and need to factor your repair costs into the mortgage, the FHA 203K streamline mortgage program is a great option.

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