A little-known federal mortgage loan program could be just what some owners of storm-damaged homes need.

The 203(k) program, with loans guaranteed by the Department of Housing and Urban Development’s Federal Housing Administration, is designed for renovating or rehabilitating a primary residence.

While part of the program is aimed at home purchasers, another part provides refinancing that covers the cost of renovations as well.

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Jeff Onofrio is the director of renovation lending for AnnieMac Home Mortgage, which has an office on New Road in Northfield, others in Massachusetts and California, and is headquartered in Mount Laurel, Burlington County.

Onofrio said the 203(k) mortgage could allow homeowners to raise the foundation if needed, replace drywall, do mold remediation, or whatever’s needed.

“You can do basically anything with a 203(k) loan. You can put a whole new home on an existing foundation and still have it be considered a renovation,” said Onofrio, 36, of Marlton, Burlington County.

He said the only thing the program doesn’t cover is luxury items, so it can’t be used to add a swimming pool to a property — but it can provide up to $1,500 for repair of an existing pool.

The FHA-backed mortgages have favorable rates and down payments as low as 3.5 percent.

“Right now, most clients are locking in at 3.625 percent and 3.75 percent, taking a 30-year-fixed mortgage almost all of the time,” Onofrio said.

The mortgage is based on an appraisal of the home’s worth after renovation, and the loan can be for up to 110 percent of that value, he said, “so there’s some leeway even if they have value issues.”

There are maximum loan limits specific to each county, he said. Locally, for a single-family home they are:

  • Atlantic County, $453,750
  • Cape May County, $487,500
  • Ocean County, $729,750

Onofrio said FHA also requires mortgage insurance, which typically adds $200 to $300 a month to the payment.

For that reason, AnnieMac Home Mortgage usually helps people refinance out of the program and into a conventional mortgage in about a year, to eliminate the mortgage insurance, he said.

Full details about the 203(k) program are available from HUD online. Just search for “203k loan program” and the portal.gov.hub site should come top of the list.

Onofrio said the program won’t work for everybody, but could be the help many need, especially if they’re losses aren’t covered by insurance.

Business pessimism

Small business owners have gotten more pessimistic, with more of them expecting poor cash flow and more cut jobs, according to the fourth quarter Wells Fargo/Gallup Small Business Index.

Some key measures were the worst they’ve been since the survey began nine years ago, including:

  • The percentage of small business owners who expect to cut jobs in the next 12 months, which jumped from 10 percent in the third quarter to 21 percent
  • The percentage who expect poor cash flow, now 30 percent, up from 23 percent
  • The percentage of small business owners who expect their financial condition to be poor, which jumped to 28 percent from 20 percent

The overall index, which gauges current and future conditions, plummeted from a positive 17 in the third quarter to negative 11 in the current quarter.

The survey of 607 small businesses was conducted from Nov. 12 to 16 and has a sampling error of plus or minus 4 percentage points.

ReNew Jersey

The New Jersey Chamber of Commerce is renaming its annual excursion to Washington with legislators to recognize efforts to rebuild after Hurricane Sandy.

To the event’s Walk to Washington title, the chamber this year is adding “and Drive to ReNew Jersey.”

The actual conveyance will be neither driving nor walking, but the usual chartered Amtrak train expected to carry about 800 business people, 40 legislators, 25 media representatives and one governor.

Gov. Christie will give the keynote address Jan. 31 at the 76th annual Congressional Dinner at the Marriott Wardman Park in Washington.

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