How many times have you looked at homes and found one in an ideal location that’s exactly what you want, or could be if you could just get rid of the old fixtures, update the heating and cooling systems, tear down the 1970’s wallpaper, and install new carpeting? Or, maybe that house is perfect the way it is, but Grandma will soon be moving in with you and will need alterations to provide accessibility for her walker, and maybe a wheelchair.
You know you can swing the mortgage loan, but then you’re going to need another $10K, $20K, or more to make the improvements you need, and where is that money going to come from?. Your savings or retirement account?.. Credit cards?..Personal loan? Not a possibility, so better keep house hunting. Or maybe not!
Many homebuyers are not aware of the existence of FHA’s 203K Home Renovation Loan Program, which is an FHA loan with a twist. This “new”(30-year-old) program is designed to provide mortgages that cover the costs of renovations, modernization, ADA compliance, and a shopping list of other types of improvements.
Clint and Tabatha Noel recently found a house they wanted to buy.
“Quite frankly, it was more than we ever imagined we’d be able to get for our first house,” Clint said.
But it had been vacant for about a year and a half, and it needed work, including a new roof, water heater and plumbing fixtures.
“It came out to a total of almost $20,000 for the roof and the plumbing,” Clint said. “As first-time home buyers, we obviously don’t have the money.”
The seller wasn’t in a position to deal, however, because it was a short sale and their original lender wouldn’t give them a mortgage unless the problems were fixed.
The solution turned out to be a Federal Housing Administration loan that’s been around for a while but has never achieved much notice. FHA 203K renovation loans allow 203k Home Buyers to get an FHA mortgage with extra money for repairs and rehabilitation.
203k Renovation loans are becoming increasingly popular these days, as lenders get pickier about problems with houses and home equity loans are harder to come by.
FHA-insured loans traditionally have been a resource for first-time buyers and those with blemished credit because they require only a 3.5 percent down payment, have lower credit standards than conventional loans and allow borrowers to use gift money for down payments and closing costs.
But they fell out of favor in recent years, thanks to an explosion of alternative private programs, particularly subprime loans.
With the subprime market disappearing and lenders tightening standards for other mortgages, the FHA is back.
The 203(k) is an incredibly flexible type of loan. Not only is the cost of renovations built into the mortgage, but also a borrower can actually add months of mortgage payments to the loan. In this way, the buyer is protected from having to make dual house payments if the home cannot be occupied while being renovated.
The list of covered improvements is comprehensive, including provisions for:
Energy conservation improvements
Changes for improved functions and modernization
Elimination of health/safety hazards
Changes for aesthetic appeal
Plumbing, heating air conditioning, and electrical upgrades
Well and/or septic repairs
Roofing, gutters and downspouts
Flooring, tiling and carpeting
Major landscape work and site improvement
Access for the disabled (ADA compliance)
The 203K FHA loan may be the answer to making your next home, or your current home, into your Dream Home!
Your mortgage lender has all the details, and will gladly walk you through the steps and through the door of the home you always wanted.
Richard Bonn is the owner of Awesome Web Marketing. For more information on Richard please visit http://www.203kRenovationLoan.com
[tags]203k, 203k mortgage, 203k streamline, homebuyer, dream house, home improvements,[/tags]
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