Lew Sichelman

At last, Uncle Sam’s primary program for helping homeowners and buyers rehab their properties is moving into the 21st century with updates that will make repairs, whether small or major, much more feasible.

The Federal Housing Administration’s 203(k) Rehabilitation Mortgage Insurance Program allows borrowers to add rehab and repair costs to their FHA mortgage. The resulting single loan can be used to purchase a house or refinance an existing mortgage. It covers structural repairs such as foundations and new roofs, modernization of kitchens and bathrooms, and projects to increase energy efficiency and climate resilience.

The program, however, hadn’t been updated in years. Eight long months ago, the FHA asked lenders and other industry players what they thought about its proposed changes.

Finally, earlier this month, the agency published new rules to modernize the program.

There are two variations of the 203(k) loan: the standard version, used for financing substantial remodeling and repairs, and the limited version, for minor remodeling and nonstructural repairs. Under the new guidelines, borrowers using the limited loan can borrow up to $75,000 over and above their mortgages – a huge increase from the former limit of $35,000.

Besides raising the loan limits, the FHA is giving borrowers more time to complete the work: up to 12 months for the standard loan and nine months for the limited version. Both versions had a six-month deadline, previously.

For borrowers who choose to use a consultant to help them complete their 203(k) applications and supervise the work being done, the FHA has adopted a new fee structure that allows, among other things, for the consultant’s charges to be added to the loan amount – thereby relieving borrowers of that additional out-of-pocket cost.

In hopes of encouraging more consultants to participate in the program, the agency also increased the types and amounts of allowable fees consultants can charge. It had been nearly 30 years since permissible consultant fees had been updated.

While announcing the changes, FHA Commissioner Julia Gordon called them “long overdue.” The changes must be implemented by lenders no later than Nov. 4.

A Pre-Moving Checklist

Buying that first house is an exhilarating experience. But when the buying cycle ends and the place is finally yours, the homeownership journey is actually just beginning. There’s a lot to consider before you actually move in.

For example, you’ll want to change the locks on all your exterior doors, including the garage. After all, you don’t know who the previous owner gave keys to. And don’t forget to change the codes on your garage door openers.

Another step: Consider a deep, thorough cleaning of the place, especially the carpets and appliances. The previous owner likely cleaned the house before listing it so that it would show in its best light, but that may have been months prior to the time you’ll take occupancy. Hiring a professional cleaning company to refresh the place is a good idea.

You’ll also want to set up accounts for each of your utilities – water, gas and electric – so they’ll be operational when you arrive. Don’t forget to place a change-of-address form with the post office, and start notifying all your recurring accounts of your new location. You’ll likely miss a few, but you can play catch-up later.

Another important pre-move-in step is to make sure all of the detectors – smoke, carbon monoxide and radon – are operational. Even if they are, you might want to install fresh batteries; you never know when they were last changed. And if the house lacks any of these lifesaving sensors, install them right away.

You’ll want to locate the main water shut-off valve, the circuit breaker and any other critical operating systems controls. You never know when you might have to use them, so knowing where they are and how they operate is important.

Once you move in, time will move slowly at first. You’ll unpack, get settled and put things where they belong. You’ll get to know your neighbors, explore your new surroundings and learn where essential services are located. And you might enroll yourself and your family members in sports, classes and other social and recreational programs.

Eventually, you’ll establish a daily routine and settle into homeownership. It might not go smoothly at first, but as time moves on, the bumps in the road will feel more like mere nuisances.

Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.