Junk

203 (k) - No, it isn't the latest employee retirement fund, although it may be more profitable, more secure, more headache and more personally rewarding.

203 (k), also known as Renovation Lending is the answer to my prayers. Where have I been lo these many years that I have never heard of this? Is it new? Is it a secret? Have I been under a rock? I don't know, I don't think so, and yes.

Renovation Lending is the practice of basing a mortgage on the future value of the property as apposed to the current value of the property. Because the lender is taking an added risk as well as a more active part in the value of the property, not all lenders offer this program. (In fact, not long ago I was looking for just such a thing and was told there was no such thing. Okay. So it is a secret. Sssshhhhh!)

In short, the purpose of a 203 (k) mortgage is to encourage people to buy homes in need of repair and then to actually repair them. Yes there is more paperwork involved in the loan but the lender plays a very active part in the process. From feasibility studies, to consultants, to appraisals. Inspections have to be performed periodically in order for the lender to see that the work is actually being done and by a qualified technician, then money is released to pay for the work.

This is a win-win proposition for all. The homeowner gets the home they want at a price they can afford, the community gets its older housing stock repaired, and the Realtor (r) gets a sale they might not have ordinarily got. Someone looking for a 4 bedroom home on 2 acres with only 150K to spend? Find them an older home which is usually also a larger home, get them on the road to fixing it up and they have a great home and you have a sale.

More details to follow. This is a topic near and dear to my heart so I will be giving it lots of blog space.