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203K loan experiences? (fees, accept, PMI, construction) – Real Estate -Brokers, appraisals, development, lease, investing, relocation, apartments, houses, condos, values, mortgages, loans…

 

03-25-2016, 08:34 AM

 
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We have been approved for a 203K refinance loan. Honestly, I really do not understand the details of it and think it sounds too good to be true. I was looking through a thread on here titled ‘203k nightmare’ and it got me concerned.

Does anyone have any experience with or stories about 203k loans? Do you recommend it or is it better to just stay away.

Any information would be appreciated. Thank you.

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03-25-2016, 08:50 AM

 
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Quote:

Originally Posted by LemonZinger321
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We have been approved for a 203K refinance loan. Honestly, I really do not understand the details of it and think it sounds too good to be true. I was looking through a thread on here titled ‘203k nightmare’ and it got me concerned.

Does anyone have any experience with or stories about 203k loans? Do you recommend it or is it better to just stay away.

Any information would be appreciated. Thank you.

I think it depends on your lender. We were going to go that route as well but have opted to just refi to a conventional to drop PMI and save up to pay cash for updates. My original lender made it sound so easy but after talking to a specialist with a 95% close rate and who closes many 203k’s we learned that the amount of steps involved and people involved were a huge headache for the small amount money we needed. The fees alone were almost half the amount of money we were using for the bid and the rate was higher as well. Overall, it just wasn’t right for us in the end.

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03-25-2016, 10:01 AM

 
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Quote:

Originally Posted by LemonZinger321
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We have been approved for a 203K refinance loan. Honestly, I really do not understand the details of it and think it sounds too good to be true. I was looking through a thread on here titled ‘203k nightmare’ and it got me concerned.

Does anyone have any experience with or stories about 203k loans? Do you recommend it or is it better to just stay away.

Any information would be appreciated. Thank you.

government loans (FHA)-complicated
construction loans-complicated

mix the two together….often a recipe for disaster. search for more threads on the site here.

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03-25-2016, 10:19 AM

 
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Thank you both for your candid responses.

I just have a bad feeling in my gut over this.

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04-01-2016, 03:39 PM

 
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Was looking into this too as an option to buy in a competitive market. However it does seem quite complicated.

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04-04-2016, 10:21 PM

 
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The loan officer needs to be experienced so he/she can push things along.

The contractors need to be gotten out there quickly so give their estimates. And some are slow in writing up those estimates even in the best of times.

Then they need to be quickly sent in.

The contractors need to be willing to accept half payment in the beginning and then wait up to 6 months till all the contractors are finished. That said, it can be extended beyond six months leaving the painter father of 8 unpaid for the remainder and mad.

Or all the contractors can get their estimates in easily and the work can progress at a good pace; all are paid even before the 6 month deadline and the buyer is happily moved in.

So, a lot can depend on how bad shape your house is in.

I’ve known several people who have bought through this plan. Most went smoothly.

And lately I am seeing more and more people refinancing their homes through this plan.

(I’m not talking here about the Streamline where there’s a max and no structural repairs allowed.)

Edit: just read the “nightmare” topic. glad I nor anyone I knew never encountered some of those issues. Only ones we had trouble with were getting those estimates and getting everyone to finish in time.


Last edited by cully; 04-04-2016 at 10:32 PM..

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04-05-2016, 10:18 AM

 

Location: Austin

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Many people think they can get a 203k and then do work themselves, and that’s not the case. You must use 203k approved contractors to do with work, and it must be done within the time frame they give you. There is no flexibility in that.

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04-06-2016, 09:30 AM

 
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I’ve done about a hundred rehab loans, and it does not matter how proficient I’ve become, or if we use contractors who have also worked a ton of rehab loans. It’s the same result every time. Borrower doesn’t want to understand the process, they just want it over with. Borrower quickly forgets that they are doing a doc-heavy, fee-heavy, legwork-heavy loan, and the whining starts before the rehab work even begins. By the end of the process, borrower is “just so exhausted.” From what, looking at paper? scanning paper? Using their telephone?

It’s a circuitous process, but the pattern seems to be that borrowers are so put out by having to participate that their perceived “fatigue” makes them cranky to the point that they rail against underwriters and the Evil Bank. And they quickly forget that rehab loans come with higher rates, whether FHA or Conventional, so their memory of the entire experience is that they had to “do everything,” and they got screwed on the rate.

I’m over it. I no longer market this loan type. Strictly VA these days, because those borrowers know what hard work is, and they don’t ever, ever gripe.

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04-06-2016, 11:21 AM

 
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Originally Posted by Pfhtex
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I’ve done about a hundred rehab loans, and it does not matter how proficient I’ve become, or if we use contractors who have also worked a ton of rehab loans. It’s the same result every time. Borrower doesn’t want to understand the process, they just want it over with. Borrower quickly forgets that they are doing a doc-heavy, fee-heavy, legwork-heavy loan, and the whining starts before the rehab work even begins. By the end of the process, borrower is “just so exhausted.” From what, looking at paper? scanning paper? Using their telephone?

It’s a circuitous process, but the pattern seems to be that borrowers are so put out by having to participate that their perceived “fatigue” makes them cranky to the point that they rail against underwriters and the Evil Bank. And they quickly forget that rehab loans come with higher rates, whether FHA or Conventional, so their memory of the entire experience is that they had to “do everything,” and they got screwed on the rate.

I’m over it. I no longer market this loan type. Strictly VA these days, because those borrowers know what hard work is, and they don’t ever, ever gripe.

I think there is a lot of truth to this, HOWEVER, not all lenders are as upfront about the process in the beginning. As much research as I did before hand, boy did it seem enticing to go with the lender who made it sound smooth and easy. then I spoke with one who laid it all out for me (he had an awesome system for disseminating information. Very well prepared) and that is when I decided it wasn’t worth it because we just didn’t need the financing that badly.

It may be true that borrowers don’t want to be educated, BUT lenders can be more honest upfront as well.

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