A Helping Hand, FHA 203K
Thursday, August 27, 2009 | Comments Off
Home renovations can be daunting, but financing them doesn’t need to be. Homebuyers considering a fixer-upper and homeowners thinking about doing a major rehab work might want to consider an FHA 203K loan.
Often called rehab or renovation loans, 203K loans differ from traditional mortgage loans. Buyers who want to purchase a home in need of repair usually have to secure a loan to buy the property, get additional financing to complete the renovation and then get a permanent mortgage to pay off the interim loans. 203K loans, however, are made based on the after-repair value and include an escrow account, in which the money is dispersed in draws as the necessary renovations are being completed.
Renovation loans can be used in two ways: to purchase an existing home and renovate it – or to pay off existing debt on a current residence and renovate it. The types of improvements allowed on 203K loans are extensive – painting, room additions, decks, bathroom and kitchen remodels, and even going green. Luxury items and improvements are generally not eligible.
Homebuyers need to work closely with their Realtor, lender, as well as a contractor to get a detailed statement about the extent and general cost of the rehab work and the expected market value of the property after the completion of the work. After finding a HUD-approved lender and inspections and appraisals, the work can begin.
For more information to www.hud.gov
Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor
www.BrianRipp.com serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.
Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp