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We are in process of getting an FHA 203k Streamline mortgage. Our lender is saying she can't tell us we can actually get the financing until she has information like the bids from contractors for doing the proposed work. In other words, she says she can't even submit the loan for an approval until then.
We thought that the FHA 203k Streamline loan -- because it will only allow a loan up to $35,000 -- can be approved, but just that costs have to be kept under that amount. Our understanding was that if, for example, our actual costs for the rehab came to $20,000 of that $35,000, then we could escrow the remaining $15,000 to use for any future improvements, OR we could even pay it back into the mortgage. If what we have read is correct, then seems that the lender would not need to wait on our bids, she could go ahead and do the loan for the $35,000 max and get us approved on that.
Our concern is that we already have $1000 earnest money in escrow with the title agency, and they are getting anxious over whether we can get our funding. Don't want to lose that $1000 due to some mistake the lender might be making.
We are in that process -- having initial inspection done tomorrow, and a contractor to give an estimate on solar and plumbing. So, moving as fast as we can ....
The bids are vital to the calculations and the maximum loan amount. It's not whatever you want, just not over 35K. There's a precise calculation sheet that they work up, but only after the bids are in.
Thanks for the information -- what has confused us is that we have definitely seen (on websites about FHA 203k) statements that any leftover funds will be applied as a payment on the back end of the mortgage loan. In which case, seems like the fastest and easiest thing to do would be to okay the loan up to the $35,000 limit. Then again, I'm not a lender
We are moving fast on getting the estimates -- all of the estimates (we're getting 3) should be to the lender by end of this week.
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