FHA 203k LOANS FOR HOME REMODELING IN MASSACHUSETTS

The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. The Section 203(k) program is the Department’s primary program for the rehabilitation and repair of single family properties.

What is different about this loan?

Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.

When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan.

What properties are eligible?

To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.

Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place.

In addition to typical home rehabilitation projects, this program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.

An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.

A 203(k) mortgage may be originated on a “mixed use” residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property.

The Department also permits Section 203(k) mortgages to be used for individual units in condominium projects that have been approved by FHA, the Department of Veterans Affairs, or are acceptable to FNMA under the guidelines listed below.

The 203(k) program was not intended to be a project mortgage insurance program, as large scale development has considerably more risk than individual single-family mortgage insurance. Therefore, condominium rehabilitation is subject to the following conditions:

• Owner/occupant and qualified non-profit borrowers only; no investors
• Rehabilitation is limited only to the interior of the unit. Mortgage proceeds are not to be used for the rehabilitation of exteriors or other areas which are the responsibility of the condominium association, except for the installation of firewalls in the attic for the unit
• Only the lesser of five units per condominium association, or 25 percent of the total number of units, can be undergoing rehabilitation at any one time
• The maximum mortgage amount cannot exceed 100 percent of after-improved value.

After rehabilitation is complete, the individual buildings within the condominium must not contain more than four units. By law, Section 203(k) can only be used to rehabilitate units in one-to-four unit structures. However, this does not mean that the condominium project, as a whole, can only have four units or that all individual structures must be detached.

Example: A project might consist of six buildings each containing four units, for a total of 24 units in the project and, thus, be eligible for Section 203(k). Likewise, a project could contain a row of more than four attached townhouses and be eligible for Section 203(k) because HUD considers each townhouse as one structure, provided each unit is separated by a 1 1/2 hour firewall (from foundation up to the roof).

Similar to a project with a condominium unit with a mortgage insured under Section 234(c) of the National Housing Act, the condominium project must be approved by HUD prior to the closing of any individual mortgages on the condominium units.

*The information on this page has been taken from the HUD website. We recommend you visit this site for additional information.

Every Massachusetts and South Shore homeowner wants to feel confident about the safety of his/her family. Homeowners know the bathroom can be the most dangerous room in the house. In addition to the risk of personal accidents and injuries, electrical receptacles and plumbing could pose a risk of damage to the home itself.

If your bathrooms have not been updated in ten to fifteen years (or more), a safety update in your bathrooms might be a wise and timely investment. Do you have the same electrical outlets beside your bathroom sink that has been there since the house was built thirty years ago? Have your plumbing fixtures, pipes and fittings been upgraded or updated since the house was built? If not, it might be time for a safety upgrade.

Here are some of the basic updates and upgrades you might want to make in your bathrooms:

These tips will help you take the most important steps in making your bathroom safer for your family.

Bathroom remodeling ideas for an average sized bathroom include such things as putting in new fixtures for your lighting, sink, or bathtub. Sometimes those small changes can make a huge difference in the look and feel of your bathroom. If you are basically satisfied with your bathroom, but feel like some minor changes would make a world of difference, then you might want to consider making some of these changes. Replacing fixtures in your sink or bathtub are average bathroom remodeling ideas that generally do not require a great deal of time or money. Lighting can also be changed out for a fairly reasonable cost (usually), but this may depend upon the size of your bathroom, as well as how elaborate you choose to get with your choice of lighting fixtures.

Remodeling ideas might also include adding or improving upon the storage cabinets that you have. Sometimes fairly simple carpentry projects do not cost a great deal of money, so this is certainly an option worth looking into if you are on a budget and only want some basic remodeling done. Of course, it will still be necessary for you to consult a reliable and reputable South Shore remodeling contractor for any remodeling that you need. Looking online for general contractors is a great way to find out some basic information about them, but true research requires both time and patience.

In seeking out the best Massachusetts remodeling contractors, you need to find out a variety of information, including whether he or she is licensed and bonded, and whether that individual carries worker’s compensation insurance. Recommendations from friends and family are sometimes the best sources of reliable information, but not everyone just happens to know somebody who has had a home remodeled. If you do not have personal referrals, then you need to make sure that you get as many references as possible from each contractor that you are considering entering into an agreement with. Check each reference that is given to you, and then combine that information with your own gut instincts about each professional that you interview.

Remember that some average bathroom remodeling ideas will not only be affordable, they will make an incredible difference in the atmosphere of your bathroom.

Custom decks are becoming more and more popular for South Shore area homeowners. At best, a well-planned custom deck can transform your backyard into a roofless sanctuary for relaxation and entertaining that also accentuates your Massachusetts home’s distinct style for the entire neighborhood to see.

At 1st Choice Home Improvements, we have built and installed hundreds of decks in Massachusetts, and we will advise you on design and material choices as well as come out to your home to get a sense of what you want in the context of what is possible for your space.

Our ongoing commitment to custom decks in Massachusetts while providing professional customer service and satisfaction has earned us the best in reputation for being a professional custom deck contractor with reliability and quality workmanship.

We are committed to our Massachusetts clients before, during, and after the deck installation. Utilizing the industry most preeminent deck materials.

If you are looking for a South Shore deck contractor, please call us today at 508-801-3482 or complete our online request form