All Forum Posts by: Kyle Gregg

youll have to live there for at least a year before refinancing out of the FHA loan. i just moved into my 203k property last weekend with intentions of renting it out a year or two from now.

@Dan Liptak contractor. 

Hello everyone,

I am wrapping up a 203k right now and the final draw is pending. My full 203k had a contingency reserve for 10%. My loan originator initially told me that this contingency reserve could either be put back towards principal or released to me. My new loan officer is telling me that it has to be put back towards the loan.

I was hoping to see the contingency reserve at the end of my rehab to complete extra work that was outside of the SOW.  

Is there any FHA regulations, forms, etc that can explain the rules for using the contingency reserve?

Thank you,

Kyle

let me know if you have any other questions!

 i read your original post and i still stand by the 203k. i believe my situation with my LO was a rare occurrence. Matters were corrected in my favor and closing happened the following week. Also, with my contractor, things have been working very smoothly and stressfree. FAR from cutting myself with a butterknive, as you keep saying. 

In the end, im getting into a beautiful fully renovated custom 2bed 1bath rowhome with 30k equity in my pocket. if that isnt a successful 203k, tell me what is! 

@Pyrrha Rivers

I got unlucky with my loan officer. she was a old friend of mine that happened to do mortgages. I blindly trusted her too much. Once she got fired, another loan officer took over and got me to closing within a week and corrected the situation by only having me contribute 3.5% with them paying all closing costs.

Honestly, it was my mistake as a first time home buyer. i SHOULD have know that i needed money for closing....but i stuck with what my LO told me...as shes the one selling me the funds. 

Just be very knowledgeable of the entire process and know what to expect coming into situations. Dont let them mislead you or try to 'sell' you. 

And yes, my contractor is AMAZING. a full gut job of a 1000sqft rowhome will be wrapping up in two weeks...a little over two months. CRAZY. 

Good luck!

yeah you need 3.5% for down payment for a FHA loan but dont forget closing costs! this could add up to 6%. dont be fooled by people saying that all you need for a fha is 3.5%.....

use the rule that leaves you in the worst case scenario. favoring one rule more than the other because it gives you more cashflow is probably a bad idea. 

also you just calculated your maximum asking price to meet the 1% rule....what about your rehab budget? Dont forget to factor your rehab when putting together an offer. if you're serious, get a contractor to give you an estimate on the rehab so you can better understand what its going to take to bring this property up to your standards. 

finding a distressed property and using the 203k is probably your best bet to make these rules work in your favor. 

keep learning and keep saving. get your finances in line before even thinking about making any drastic moves. this is the time where you soak in as much information as possible. 

for an FHA 203k, you will need a minimum 3.5% down payment PLUS closing costs which can amount up to 6%. People forget to mention closing costs ALL the time when it comes to 203k, leading people to believe they can buy property with 3.5% down.

Digging around biggerpockets for the next couple months is my advice on what to do next. 

 sorry, but that is a boiler plate post that doesn't help anyone...