If you have a situation where repairs are needed, but the seller is not able to complete the repairs prior to closing, there are two ways of getting financed:

Minor Repairs – repairs totaling less than $3,300 can be escrowed on a conventional loan or an FHA loan. Essentially, the lender holds in escrow the amount of the repairs as well as a 1.5% contingency reserve (the total escrowed amount cannot exceed $5,000). In addition to the escrowed money, the borrower would need funds for the down payment, any closing cost requirements as well as the actual cost of the repairs. The borrower has 10 days from the date of closing to complete the repairs. After the repairs are completed, the escrowed amount is released back to the borrower. This route does require the borrower to have sufficient funds, but it is a way for the borrower to purchase a home with minor repairs.

Major Repairs – The FHA 203k is a way for borrowers to purchase a home that has repairs in excess of $5,000 and less than $33,000. This loan does NOT require a repair escrow. The repairs can be financed into the loan above and beyond the sales price. An attached flyer will provide more information on this loan program. The ultimate situation would not require either of these two loans to be used; however, in today’s market having this knowledge may be useful.

Courtesy of : Kevin Meador, Branch Manager/Loan Originator America's Mortgage Resource

For additional information on buying a home in Ocean Springs contact us at 228-875-4499.