Renovate your home with FHA 203k

FHA 203k
Renovate your home with a FHA 203k

If you’re like many home buyers, you’re probably looking for a home that is “turnkey” or an updated home that is ready to move right in.  However, since inventory is tight, competition can get intense.  But rather than passing on the “diamond in the rough,” consider the FHA 203k.

The FHA 203k is HUD’s rehabilitation loan.  The “203k” actually refers to the section within the National Housing Act that provides HUD with the ability “…to promote and facilitate the restoration and preservation of the Nation’s existing housing stock;” in other words provide mortgages to renovate and rehabilitate existing homes.  Although the program is not allowed to provide for “luxury” upgrades (such as hot tubs), the program may be used “…to finance such items as painting, room additions, decks and other items…”

If you’re purchasing a home that is not a total rehab project, there is a streamlined version of the program that can assist you to purchase the home and provide additional funds (up to $35,000) for improvements and upgrades.  The FHA 203k-streamline is a “limited loan program” designed to provide quicker access to funds so your home move-in ready relatively quickly.

The “203k” process is relatively straight forward.  After identifying a home, you should consult your 203k lender and consultant about the feasibility of a FHA 203k.  A project proposal is prepared detailing a cost estimate for each repair/improvement.  During loan underwriting, the appraisal is completed to determine the value of the home after the proposed repairs/improvements are completed.  If the mortgage is approved, the home is purchased with the loan and the remaining funds are placed in escrow to pay for the project.

Much like a typical mortgage, you must qualify for the program by meeting underwriting standards for borrowers.  However, unlike the typical mortgage, additional underwriting requirements include review of architectural plans and repair estimates (materials and labor) from licensed contractors.  HUD approved consultants/inspectors examine and evaluate the project’s progress to ensure work is completed and compliant with HUD standards.  Funds for the repairs/renovations are released in draws to ensure the work is completed as intended as well as meeting all zoning, health and building codes.

Of course, the home must also meet eligibility guidelines.  The home: must be one to four units; must be at least one year old; and must meet neighborhood zoning requirements. The program allows for major rehabilitation on homes that have been razed provided that the foundation still exists.

But what if you’ve decided to renovate your home rather than move?  The FHA 203k allows for home owners to make renovations, updates, and sometimes additions.  The possibilities seem endless (as long as your vision stays within the loan limits).   Besides painting and updating kitchen and bathrooms, you could possibly even expand your existing house with an addition.  The FHA 203k even allows for many “green” upgrades to make your home more efficient.

FHA guidelines have been revised in recent years, and may undergo further revisions.  It is important for home buyers and others who are interested in the FHA 203k to consult with an approved FHA lender for borrower and home qualifying guidelines, loan limits and 203k acceptable improvements.  Additional information (including a list of lenders) can be found on the HUD website (

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By Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

What’s your relationship with your home; how homes impact our lives

by Dan Krell
© 2012

homesHave you considered your relationship with your home?  Just like the relationships we have with our family, friends, and acquaintances, we also have relationships with inanimate objects such as our cars, computers, and our homes.  Granted, the relationships we have with our cars and homes are not the same as our human relationships, and it may sound farfetched; but if you think about it for moment, these relationships can affect our moods and lifestyles just the same.

Your relationship with your home can sometimes make you feel satisfied or frustrated, and maybe both.  But chances are that you were not always ambivalent about your home.   At one time you might have thought your home was perfect.  Or you may have decided that you were ok with the quirks in the home because you once planned to fix them.

But the reality is that over time you change: your lifestyle changes; your use of space changes.  Likewise, your home changes too: the systems become less efficient; the rooms may feel too small/large; the kitchen becomes dated, etc.

Just like your human relationships, your home requires maintenance.  Regular maintenance of your home’s systems can help assure that you will be comfortable day to day.  Ignored systems can fail when you rely on them the most, leaving you miserable and wondering about your home.  Commonly ignored systems include (but certainly not limited to) HVAC and the roof.  Having a licensed HVAC professional check the home’s furnace and air conditioning as recommended may not only ensure the system works when you need it the most, but may also help lower energy bills.  Regular inspection of the home’s roof gutters and downspouts could prevent future water penetration issues.

homeOf course, as we continually change and develop, we want our relationships to grow as well.  So, it is possible that one day you might look around your home and feel that it’s time to spice up the relationship a little – You might be thinking of some renovations, updates, and possibly expanding the home.

Unless you plan to make renovations regularly, don’t make a mistake and focus solely on making your home “trendy.”  Before you decide on a major project, experts recommend you consult with a professional interior designer and/or architect to assist in making choices that can prolong the “freshness” of the renovation.

Kitchens and bathrooms are usually where the most money is spent, and that’s because those rooms tend to get the most traffic and use.  When designing a kitchen or bathroom, it is easy to go overboard on the renovation, but even a modest refurbishment can increase your enjoyment of the home.

As you renovate the interior, don’t give the exterior the short shrift.  Upgrading the home’s windows and siding not only increases the home’s efficiency, but may also increase the home’s curb appeal when it’s time to sell.

Relationships change and sometimes end; even the most meaningful ones.  This is no different with your home.  One day you may find that although your home may have sheltered you and your family without fail for many years, you may find that your needs may have changed; you may need more or less space, or may need to live in a different city.  And just like old friends, you may one day find yourself fondly thinking about your “old” home where you once lived.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 26, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

Mold in your home

by Dan Krell © 2012

moldy houseEnvironmental issues in the home are a concern.  Although there are linked health concerns, mold is an environmental issue that is often misunderstood because it can be found almost everywhere and its indoor growth may be managed.

Mold is a fungus; and because there are thousands of types of molds (the exact number is unknown), it is often referred to in the plural.  Molds are essentially found everywhere.  Molds typically grow outdoors in moist areas and live in soil, on plants, wood, and decaying plant matter; however, mold can also grow indoors if the humidity is high enough, or if there is an unrepaired water leak.  Molds are useful in digesting dead plant matter as well as for other purposes; however, exposure to molds can also be a health risk.

Molds reproduce via spores; mold spores are found outdoors and indoors surfaces, and can remain dormant for years before they grow.  Mold spores enter the home through doorways, windows, and outdoor vents; as well as hitching a ride into the home by attaching themselves on clothing, pets, and other items that are carried into the home.  If the spores land on a damp surface (such as where leaks or flooding may occur in the home) they begin to grow and digest the material.  Wet building materials can offer a perfect meal for molds.  Molds can thrive on materials made from paper products, cardboard, ceiling tiles, and wood products; however, molds can also grow on many other materials, such as dust, paint, insulation, drywall, carpet, and fabric.

The most common indoor molds are Cladosporium, Penicillium, Aspergillus, and Alternaria.  Mold problems in the home can usually be seen and/or smelled.  If unimpeded, molds can, over time, eventually destroy the materials where they grow.  For this reason, prevention and/or elimination of mold growth in the home can prevent damage to your home and possessions, as well as save you money.

moldy houseLimiting excess moisture is fundamental to controlling indoor mold growth.  Common areas where mold may grow include bathrooms, basements, anywhere condensation and leaks may be found.  A common cause for mold growth in the home is uncontrolled humidity.  To limit mold in the home, experts recommend: indoor humidity levels should not exceed 50%; use air conditioning and dehumidifier to assist in humidity control; ensure exhaust fans are operational and the home is properly ventilated; carpets should not be used in areas that are susceptible to excess moisture (such as bathrooms); remove/replace previously water logged carpets; and repair any leaks.

Although controlling humidity levels and properly ventilating the home may inhibit mold growth in the home, a problem can still exist.  To determine and/or repair a mold issue, a certified mold inspector and/or licensed mold remediation professional should be consulted.

Many people are sensitive to molds and sever reactions may occur; the Institute of Medicine linked indoor mold exposure to upper respiratory symptoms.  However, according to the Centers for Disease Control (, the presence of mold isn’t always an indoor health issue.  Obviously, a physician should be consulted immediately when symptoms from mold exposure are experienced.

Information for this article was obtained from the Centers for Disease Control ( and the Environmental Protection Agency (  Additional information on mold in the home and health implications can be found on their corresponding websites ( and (

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of October 1, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

Remodel instead of Move?

Moving up has been a right of passage for families for years. Families have been moving up for one reason or another, usually because of the need for space or just to move to a new neighborhood. However, spiraling home prices made many to rethink the usual move up, and instead make improvements on their homes. Rather than buying the four bedroom colonial they need due to a growing family, homeowners are adding rooms and enlarging the spaces they already inhabit. They’re thinking remodel instead of moving.

If you are unsure of making improvements or selling your home, there are some factors to consider. ( lists the top reasons for remodeling instead of moving includes: you like remodeling; you like your home floor plan; you like your neighbors; you like your yard; you have a great location; you will get exactly what you want; and you feel that it can enhance the value of your home. If you’re trying to decide whether remodel or move, you may find some of the reasons to remodel resonate.

If you decide to remodel rather than move, there are some considerations. According to you should consider how long you are going to be in your home, the costs involved, and the timing of the remodeling before you move.

If you are planning to stay in your home less than a year, you should consider the actual cost of the improvements against the return you may get on your upcoming sale. However, if you plan to be in your home for a few more years or longer consider the factors of personal pleasure and comfort.

If you are concerned with cost vs. value, a great resource that every turns to for their annual report is Remodeling Magazine ( According to Remodeling Magazine, return on investment depends on the value of the house itself, the value of similar homes in the immediate area, and the rate property values are changing in the surrounding neighborhoods. Some projects will recoup more than 100% of the original investment, however overall in 2004 the return of investment was 80.3%.

The following are the top improvements listed listed in this year’s Remodeling Magazine annual report in order of return on investment: minor kitchen remodeling -92.9%; siding replacement-92.8%; midrange bathroom remodeling- 90.1%; deck addition- 86.7%; upscale bathroom remodeling- 85.6%; and window replacement- 84.5%. You can view the rest of the 2004 report on the website.

Both selling and remodeling can be large propositions that can bring a lot of joy. There are many resources available to help make your decision. But you should verify the information you get, especially from the internet. Additionally, you should consult a local contractor and a Realtor to assist with costs of improvements and neighborhood home values.

By Dan Krell © 2005.