203 K LOANS

2 Replies

has anyone done a 203k fha loan and a PowerSaver 203(k) Pilot Program

What is a powersaver 203k Pilot Program?

I've looked into the 203k and its a hot mess. You need to get contractors to bid the projects and the money gets dished out as you finish projects. And of course its FHA so it works great sometimes but the cost of borrowing (that dang mortgage insurance especially) really cuts into the profit you can make.

@Blair Thomas  ,

I have not done a 203k (just straight FHA), but having looked into it extensively, it's only worth it if you're doing a TON of work and don't have the capital, or don't want to get a hard money loan, then refinance with cash out a year later.. (those costs add up big too!!!).

As @Steven J.  said regarding the disbursements - it is much like a construction loan. You need detailed bids, down to quality of materials before closing loan, then the 203k consultant does inspections and signs off as things get completed correctly, and makes disbursements to the contractors. There are fees, 203k consultant to pay, paperwork, etc. 

But I'm not aware of any other product in the good 'ol US of A that allows you to put under 5% for an enormous rehab project (up to $1.2MM in the SF Bay Area for 4plex), provides all rehab funding, and rolls it into a 30yr fixed rate mortgage at just over 5% after mortgage insurance.. 

I am tentatively planning to do a deal like this in the next 1-2 years. 

I don't know about the powersave, but if it's the "baby" k program, I don't think it's worth the time and expense, IMHO. 

I'm interested in hearing from some who have been through a huge project like I plan on shooting for next year.. 

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