203k loan for carpet and paint?

Question

I'm looking at purchasing an 1100 sq ft 3BD, 2BA single family to owner occupy. If I'm not mistaken the lender has advised I can use a 203K loan.  My question is, if it's a small amount of work (carpet, paint, kitchen and bath tiles, maybe cabinets) should I do this type of loan? I'm thinking I don't want to finance these things over 30 years.

Arthur Banks · Answer

@Jenna Stonecipher  Thanks! I'm handy, I can do all the above, well except lay carpet well, but I'm trying to get in the mindset that as an investor, my time is better spent looking for the next deal rather than swinging a hammer. I did that already. :)

@Robert Brubaker I'll look into that.

Robert Brubaker · Answer

Your initial instincts were right -on!  Iam a fan of 203 K

no mistake. But,this "tool" like any other has application

for  more involved circumstances.

There are other sources of finance for the type of

" up-grades "  you mention without the "strings"s

Acquaint yourself with 2nd Mortgage products and

you'll see. Paying cash always preferred! Smart Thinking!

Best of Success!

Jenna Stonecipher · Answer

I used a 203k in July for a triplex that need a good bit of work before it would be in rentable condition. If it weren't for the 203k I wouldn't have been able to purchase it. That being said, if you can get around using a 203k, I would! It's an FHA loan so the interest rate isn't bad, BUT there are alot of hoops to jump through.

1. If the property is older than 1978, they will require a lead-based paint inspection and potentially abatement

2. You have to hire a HUD inspector

3. You have to hire a licensed General Contractor to perform all of the work needed.

4. There are processes and paperwork that needs to be submitted every step of the way.

It's a pain in the butt and it will cost you more money in the long run. paying the HUD inspector, interest on repairs, and GC's premium). If you can do the work yourself in increments, it will provide you with handy know-how knowledge you'll need as an investor anyway. Just my 2cents.