PG County Real Estate

Want to buy more house in Prince Georges County than you ever imagined for your money? A foreclosed or bank-owned home can give you the chance to.  The downside is that these homes often require repairs far more extensive than a little TLC.  For many buyers, the economics do not add up if they lack the finances to make the repairs.

High Cost of Repairs? Roll it Into a 203K

One way to change this scenario is for the buyer to take out a 203k loan, which can roll the cost of the mortgage and needed repairs over $5,000 into one payment.  An FHA product, the loans can be used to purchase a home needing rehab, as well as to pay off existing house debt and renovate the property or even move a house to another location.  The program, in its streamlined form, covers repairs up to $35,000, while the full program is available for more extensive repairs.

Here’s What’s Covered

The most common types of updates covered by a 203k loan include:

• Remodeling bathrooms or a kitchen, including new built-in appliances
• Replacing a roof, gutters, and downspouts
• Adding a family room, bedrooms, or bathrooms
• Replacing flooring, tiling, or carpeting
• Completing a basement or attic conversion or adding a second story
• Expanding or building a garage or carport
• Renovating a deteriorating property, such as repairing a chimney, termite damage, or structural problems
• Upgrading plumbing, heating, air conditioning, or electrical wiring
• Eliminating health and safety hazards, such as removing lead-based paint
• Making the home accessible to the disabled
• Installing a well or a septic system
• Adding a porch, deck, or patio
• Adding or repairing siding or repainting
• Installing energy efficient windows or doors
• Repairing an existing swimming pool

Not all lenders offer 203k loans; those that do must comply with FHA rules.  A smart buyer will hook up with a knowledgeable Realtor® to guide the process.  The amount of the total loan for the property and the repairs must fall within the amount the buyer has been approved for, so a good Realtor® should direct the buyer to get a pre-approval letter and then help the buyer find affordable properties within the limits.  Once the buyer makes the offer and has it accepted, he will get a home inspection and be assigned a 203K consultant to oversee repairs and administer draws.

At this point, the property is appraised and the loan is processed and closed.  The repairs are then begun.  As is true with construction loans on new homes, payments for repairs are submitted by contractors and reimbursed.  If the buyer cannot live in the home until repairs are completed, he can finance up to six months of mortgage payments.  When the repairs are complete, the home is inspected again.

The goal of the loan is to assure habitable property within six months.  In most cases, contractors are required to perform the repairs, unless the potential buyer is skilled and licensed. For loans over $35,000 architectural drawings are required.  This program requirement is intended to overcome a common DIY phenomenon: many home repair projects that people undertake themselves drag on forever due to lack of time or money and are completed with poor workmanship.

A 203k loan could make your dream of homeownership a reality.  Express Realty Services can show you properties where a 203K loan would be helpful.

Though the $8,000 first time home buyer tax credit may be ending, people who work in College Park still have a chance to get up to $35,000 in down payment and closing cost assistance to purchase a foreclosure in the city.  Through the Work & Live in College Park Program, prospective residents can qualify for a full 10% of the value of the home if one adult works at least 20 hours a week for a College Park employer and is willing to buy a foreclosed property in the area.

Since the program aims to put distressed properties into the hands of homeowners, not investors, with a long term stake in the area, eligible participants must live in the home for 10 years, meet liberal income requirements, and attend home-ownership counseling offered by a HUD-approved counseling agency.  Homeowners must contribute at least $2,000 to the down payment, pre-paids (hazard insurance, taxes, and PMI insurance), home inspections, and closing costs.  The buyers must be prepared to bring the property up to state and local codes by repairing any deficiencies uncovered in the appraisals, perhaps through a 203k loan.  In financing the property, the homeowner must select a conventional or FHA loan with fixed terms – no adjustable or sub-prime loans will meet program criteria.

The Work & Live in College Park grant is actually an interest free loan that expires in 10 years.  If the buyers sell the property before 10 years, they owe 10% per year for each of the required years they did not live in the home. They must sell it to owners who plan to reside there.

Any residential structure in the 20740 zip code is eligible for the program, so residential structures such as single family homes, townhouses, and condominiums would qualify.  The titles for the properties must have been transferred back to the lender through foreclosure or deed-in-lieu; no short sale properties meet the criteria.

The Work & Live in College Park Program has the potential to meet a variety of important goals as foreclosed properties are transformed into the family homes they were meant to be.  Since the program requires someone in the household work at least part time in the city, it promotes “green” living as the commute is minimized or puts the workplace a short walk or bus ride away.  Because it requires residency for 10 years, the program will also build strong neighborhoods of owner-occupants.

For more information on this exciting program, you can review the program guidelines and then download the registration form.  To find a list of foreclosed properties on Prince Georges County that qualify for the Work & Live in College Park Program, visit the Express Realty Services website.