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THE GARDEN ISLAND
Friday, July 12, 2024 • B3
Feds trying to make purchasing fixer-uppers easier of the program meant for more minor remodeling and nonstructural repairs will allow homeownThe federal government is upers to borrow more money. Maximum financing for total redating a program that helps home buyers purchase and renohabilitation costs is increasing from $35,000 to $75,000. HUD vate properties using a single plans to review this limit annumortgage in an effort to get more people to use a loan it considers ally and adjust it as needed. key to preserving the country’s HUD also is giving homeownhousing stock. ers more time to complete renoThe U.S. Department of Housvations and repairs. The 203(k) program’s success depends on ing and Urban Development is althe availability of quality conlowing homeowners more time and financing to make it easier tractors, and homeowners can for them to use federal 203(k) rehave trouble finding companies that can complete the work habilitation loans to buy fixer-upwithin the program’s timeframe. pers or refinance and repair their Before Tuesday’s policy homes, department officials anchanges, HUD used to require nounced Tuesday at a news conCOURTESY OF BRANDPOINT homeowners to complete work ference in Point Breeze. The within six months. Now, owners department also is increasing The 203(k) program used to be a powerful tool to help home with more minor work to be done how much 203(k) consultants, buyers achieve affordable home ownership by buying that fixwill have nine months to comwho guide homeowners through er-upper. The federal government is looking to reenergize the the program, can be paid, which plete it. And owners whose program. HUD hopes will grow their homes need more substantial like him know that “all of us can shrunken ranks. bought and are now renovating work will have 12 months. do this.” The 203(k) program used to be their first home using a 203(k) Finding contractors is a task At Tuesday’s news conference, that 203(k) consultants can help a “powerful tool to help home loan. When they started looking buyers achieve affordable home at homes to buy, they found that Philadelphia Mayor Cherelle L. with. These consultants advise Parker said that in 2003, she used homeowners throughout the renownership by buying that fixa lot of them were fixer-uppers. er-upper. And that of course sup- So they decided to purchase and a 203(k) loan that made it possiovation process, starting with a ports neighborhood stability and renovate the rowhouse they ble for her to purchase and reno- report that lays out the work that revitalization,” Julia Gordon, the rented, which has been in her vate a home so she could stay in needs to be done and estimated family for 100 years. costs. assistant secretary for housing the neighborhood where she Work is almost complete on The consultants, who report to and federal housing commisgrew up. She said she was proud the renovations, which include loan officers, also can review that HUD chose Philadelphia for sioner at HUD, said Tuesday. contractors’ work and release “But, unfortunately, the program modernizing the home; reconfig- the announcement of the “redidn’t keep up with changing uring rooms; and installing new birth” of the program, which she funds periodically if the homemarket conditions. And it kind of plumbing, electrical, heating, and said plays a role in her goal to owner is satisfied. Homeowners fell into disuse.” cooling systems — “everything build or repair 30,000 homes in are required to use these consulThese loans make up a small that the new construction homes four years. tants when doing substantial renfraction of mortgages, but the de- have in this same neighborhood,” ovations and can choose to use New 203(k) rehab them for more minor work. partment hopes increasing usage Simmons said. loan policies “I never imagined that we The trade group for these adof them can help chip away at the nationwide shortage of prop- would be able to have this home Last year, HUD collected feedvisers, the National Association and have it change into the home back from lenders and consumof FHA Consultants, had been erties that homeowners can afthat we wanted,” he said. He said ers as part of its efforts to update lobbying for years for raises for ford. that as a young Black man, he 203(k) consultants to incentivize Point Breeze resident Kasam the 203(k) program. wanted to let people who look people to join and stay in the proSimmons, 34, and his fiancée Starting Tuesday, the version Michaelle Bond THE PHILADELPHIA INQUIRER
Average down payment on a house Lara Vukelich BANKRATE.COM You might have heard you’ll need a 20 percent down payment to buy a home. While there’s a reason that number seems standard, 20 percent isn’t set in stone. Many mortgages require borrowers to put down as little as 3 or 3.5 percent, and some loans don’t have minimums at all. Down payments and different mortgage types The minimum amount you’ll need for a down payment depends on the cost of the home and what type of mortgage you get. The minimum requirements range from no down payment at all to 5 percent. Many borrowers put down more than the minimum, either through savings, gifts or down payment assistance. In fact, 14 percent of current homeowners used a financial gift from family and friends for a down payment for their first home, while another 14 percent used an assistance loan or program for first-time buyers, according to Bankrate’s recent Down Payment Survey. The more you put down, the less you’ll need to borrow and the less you’ll pay in interest. You’re also more likely to get a better interest rate on your mortgage. A bigger down payment also translates to more equity in the home to start — a tappable asset, as well as a potential safeguard against any declines in home values. If you’re getting a conventional or FHA loan and can put down at least 20 percent, you’ll also avoid the requirement to buy mortgage insurance, an extra expense on top of your monthly mortgage payment. There is a case to be made for a smaller down payment, even if it means paying mortgage insurance. If you’ve been renting for a while and have limited savings, pulling together at least the minimum down payment might be preferable to continuing to rent, especially if your housing needs have changed. Buying a home sooner also moves you quicker into wealth-building territory, acquiring an asset you can pass down to future generations.
fession. HUD’s announcement Tuesday included increases in the fees consultants can charge homeowners. Allowable fees hadn’t been updated in decades. Catherine Hall, executive director of the National Association of FHA Consultants, said in an interview that this change “is going to put more people in this industry, and it’s so needed.” Because 203(k) consultants are required for substantial renovations, a lack of enough qualified consultants has stymied the program. Hall said she is concerned that HUD’s increase in the allowable loan amount for work considered more minor would put homeowners at risk, since they no longer need to work with 203(k) consultants for most projects up to $75,000. That “opens up a lot of opportunity for fraud and for poor workmanship and for the borrowers to be taken advantage of by unscrupulous contractors and individuals unaware of what it takes to do repairs,” she said. “It just increases the need for education.” Hall said her association plans to continue teaching lenders, real estate professionals, and consumers about the value of consultants. She also worries that allowing more time for repairs will mean contractors will drag their feet. Despite Hall’s mixed feelings about some of HUD’s changes to the 203(k) program, she said, “it’s a wonderful program that helps people get loans to get homes that might otherwise never get owned” and repair homes and help disenfranchised people who might not otherwise be able to afford to buy a home.