Looking to Buy a ‘Fixer-Upper’? The 203k Program Can Help Make It Happen
Today’s real estate market presents a lot of opportunity for interested home buyers—with the growing supply of foreclosure properties and short sales, there are certainly some great deals to be had.
The problem in buying a “distressed” property, however, is that these homes are often damaged due to lack of maintenance or prolonged vacancy. So while the price tag might be right, the investment necessary to make the home livable might just push buyers well beyond their budgets.
As a member of the Top 5 in Real Estate Network®, however, I, along with my team, have access to the latest information on mortgage and financing options. One particular option that is providing hope for many of today’s home buyers is HUD’s FHA 203k program, a loan that enables buyers to not only secure a mortgage, but receive the funds necessary to improve the home as well.
Here are five facts about the 203k program to help you determine if it might be the right fit for you:
1. The FHA Section 203k program was originally introduced
by HUD in 1978 as a program to rehabilitate and repair single-family homes. The 203k is a single mortgage loan that provides funds to purchase a home and make repairs and improvements. A simpler version, the Streamline 203k, was introduced in 2005. This version offers less documentation and lower loan fees for renovations that don’t exceed $35,000.
2. In today’s market, conventional financing, which often requires
20% - 25% down on a home and a perfect credit score, is often hard to come by. However, with less-than-perfect credit and as little as 3.5% down, you can get an FHA loan, such as the 203k.
3. The 203k approval process is a little more complicated
than a conventional loan. For example, you’re required to secure renovation costs from an established, licensed contractor and deliver a package of the proper paperwork to the lender to secure FHA approval. Make sure you work with an agent—like a member of Top 5—who is well-versed in the 203k program, or who can connect you with a lender that is.
4. The 203k loan is not just for foreclosure or distressed properties
. More than 80% of the homes in America were built before 1990—that’s over 100 million homes that are 20 years old or older—and almost every one is in need of some amount of repair and updating. The 203k loan, therefore, offers advantages for almost any home purchase.
5. The 203k loan is not just for home purchases
but can be used to finance a home improvement, as well!
Copyright© 2017 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission.