All Forum Posts by: LaShawn Stephen

@LaShawn Stephen

203k's can be a great option for low down payment owner occupants or savvy "investors" on a 2-4 unit property. 

Best advice is to organize the most qualified 203k Team possible. This includes the Lender, Contractor, & Realtor.

Lender - need to have verifiable 203k experience. The 203k lender controls the process, calls the shots, and manages the paperwork, funds the loan, selects the 203k Consultant, etc.

Contractor - any licensed, bonded, insured contractor is allowed to do the work, but that doesn't mean they know the different versions of the 203k , familiar with the unique 203k paperwork, processes, timelines, compensation structure, nuances, etc. Best to use a contractor who has been properly educated on the 203k, has sufficiently strong financials to pay for the startup costs and ongoing expenses for the 203k project. There is an accreditation called Certified 203k Contractor that verifies all that for you.

Realtor (optional) - need one who is not afraid of the 203k, can identify properties where the 203k can be used, and who can write the offer paperwork properly according to HUD guidelines.

You're only as strong as your weakest link --- select your partners wisely.

Hope this helps!

Ditto Chaelynne, it depends on your current interest rate. For example,

If your current loan is $200k, going from a 4% rate to 6.5% rate increases you payment $500/mo. (just on the current $200k; that doesn't include the fact that your loan will increase to capture the current equity). That means whatever investment you make needs to bring in an additional $500/mo in value to just break even.

I would use 203k loan as a last resort-- some people have no issues, a lot of others say the application process and rehab draw process is very tedious.

I used a Construction Loan from City Bank-- a local group that gave me 12-months I/O without any points up front as long as I refinanced with them. Local lenders can be more flexible.