Sell Sensibly With Rehabilitation Loans


The sun is just about to come up and there is a pale glow of morning off to the east. Though it is 22 degrees outside right now, I know that with the sunrise, the temperature will also rise and by afternoon, we Minnesotans will shrug off the chill, dump our jackets in the back seat and be out walking around in our shirt sleeves.   I have been known to nonchalantly brag to my California friends, about the below zero degree days in winter here, where, if you spit, it freezes before it hits the ground. We are a tough bunch of people with a diehard gene uncommon to most of the nation’s population.

In addition to our optimismwe tend to be pretty sensible people too. We are taught early on that when you cross the street, you look both ways. When the weather is extremely cold outside, you bundle up.  With this spring’s market comes an opportunity to repair some of the damage done by the nuclear winter our housing market has been experiencing. We can help people, right from the jump, make a really affordable choice that will make the purchase of a home more sustainable over the long haul and their houses cozier during our long dark winters. There’s a user friendly FHA program that allows the buyer to take out up to $35,000 in rehab funds to buy appliances, replace the flooring, put in new kitchen cabinets, get a new energy efficient furnace or water heater, add insulation, replace windows, put on new siding, and they can do this at the time of purchase. Instead of using every last dime to buy the house and then racking up a bunch of credit card bills later to pay for improvements, they can roll it all in to one low interest rate payment at the time of purchase. They won’t have to worry about some not too distant need to come up with the cash to pay for a roof or some other emergency expenditure. With energy efficient improvements, they will have lower energy costs, and a payment that is manageable.

According to the StarTribune in an article published this week, there were 623 FHA rehab loans written in Minnesota last year and according to the FHA, only 6200 or so written nationwide.   The demand in Minnesota surprised most lenders offering the program and they had to staff up to handle the volume creating delays, early on, in getting final payments out to contractors. Despite that speed bump, this is a great opportunity for new home owners.

“Buyers often make much more substantial changes at the time of purchase for a variety of reasons: they can more readily obtain improve ment financing in conjunction with the principal mortgage; they may be able to delay their move-in date until after the work is completed and therefore avoid significant disrup tion; and they can enjoy the upgrades for the entire time they own their homes.” Joint Center for Housing Studies Harvard University

Realtors and Lenders often do not recommend this product because they’ve had a terrible experience with the older brother of this product which is a full blown FHA rehabilitation loan called a 203K. The streamlined program doesn’t let you move walls but it allows most everything else and there is very little red tape. Some don’t recommend it because they don’t offer it. Some don’t want to learn about it. We routinely do these loans and will be happy to explain them to you. Give us a call.

We’ve already experienced the fallout from the days of easy money, don’t ask don’t tell, zero down, stated income, anything goes loans. This spring, I’d encourage you to look into this program as an option to keep Minnesotans in their homes, affordably, sustainably and for the long haul. They’ll thank you for the sensible suggestion and for your diehard determination in helping them become successful homeowners. You can find more information right here:

Sell sensibly-Kate Wilson

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