Found the house you want but it needs work done? So now, what do you do? The solution may be a 203k loan.
The FHA loan program is known for helping potential buyers achieve their goal of home ownership with reasonable mortgage rates, low down payments, and relaxed credit requirements. The FHA 203k Rehab loan not only allows for the purchase of a home but it also allows for the rehab and/or customization of the new home.
The financing for this loan will include the purchase price as well as the improvements you are either required to do to or that you want to do, such as upgrade the kitchen, bathroom, etc. Think of this as a one-time close construction loan. At closing, the seller receives their money and the rest is put into an escrow account for you to use for the rehab.
Below are some of the other advantages of this program:
Savings: The 203k rehab loan allows you to hang on to your savings when fixing up a the house. Repairs on a house can be very expensive. If you rely on your savings to get you through, you could run out of money quickly. Even worse, you might not be able to resell the house and then your savings are depleted. With a 203k loan plan you can finance the repairs.
Low interest: When you deal with the FHA, you will get a better than average interest rate on the money you need to borrow. Many rehab loans in the commercial marketplace can be very expensive. With a 203k rehab loan, you know that you will be getting a fair interest rate.
Great deals: Rehab loans are designed for “fixer-uppers.” Therefore, this loan will allow you to qualify for a home purchase that many other programs would not. You can get a house at a lower price than you normally would be able to on the open market.
Make the home your own: You may walk into an existing home and fully customize it for your own needs. Upgrading to hardwood floors from carpet isn’t a problem, just as an example. You may even, in some instances, add square footage.
If this sounds like what you have been looking for, Contact me today for more details!