No, But that doesn’t mean people won’t make it harder than they need to!
In Tuesday’s Star Tribune, they feature a story about a local couple who have had serious issues with the increasingly popular 203k loan program. A 203k loan allows homebuyers to buy real estate that is in less than stellar condition. Many foreclosures that have been damaged by time or neglect are candidates for the 203k loan program.
First of all, not all lenders are created equal. The 203k loan program does have very specific requirements to make the process go smoothly. Some lenders have perfected this process, most of them have not. I am proud to say that we have Elizabeth Vaughan here at Cornerstone Mortgage. Elizabeth is the master of 203k loans!
I asked Elizabeth about the article from yesterday’s paper, and am happy to report that what the Minneapolis couple experienced may not have happened if they used an experienced loan officer like those here at Cornerstone Mortgage Company. I asked Elizabeth, “Have you experienced the same problems, that contractors are being refused payment due to a back up in the banks processing?” Elizabeth responded, “Certain banks are bogged down yes, but our normal turn time when doing a 203k loan including inspection, once a draw request have been made is 5-7 days. We at Cornerstone have a staff dedicated to FHA 203k loans for underwriting and the draw process.”
When asked about the contractor the homeowner chooses to complete the repairs/rehab, does that choice affect the loan process? Elizabeth answered emphatically. “Yes! The contractor needs to be licensed and pre-approved with Cornerstone Mortgage Company. The paperwork for the 203k loan is very specific in its format and how it is presented to underwriting. At Cornerstone Mortgage, we educate Realtors, buyers and contractors so that we can have a smooth transaction. We also use 203k consultants on rehabs that are more complex, relieving some of the pressure from the homebuyer as well as the contractor.”
The FHA 203k loan program allows homebuyers to repair aspects of the home after closing, holding the funds designated for the repair at closing, in escrow until the contractor is finished, the property inspected and the payment released to contractor. This loan program truly does offer options to homebuyers who would not be able to afford the repairs out of pocket.
To request more information on the 203k loan process, click here.
Would you like to learn more about how to qualify for a mortgage? Contact Carrie Guarrero Today!
Carrie Guarrero is producing Regional Manager and Vice President of Cornerstone Mortgage Company in Burnsville, Minnesota. If you are looking for Burnsville real estate, contact Carrie first!
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I love seeing articles like this. It’s not good when it’s at the expense of homebuyers just trying to make their house their “dream home”. We do have a great program at Cornerstone and really do have the process down. Work with the best! Thanks for pointing out the differences in lenders.