If you are a first time homebuyer, you have probably been warned about the unexpected expenses that come with owning a home. Down payments and closing costs are just two of the expenses that come with owning a home, but most first time home buyers do not realize that there are even more expenses, especially those that have to do with renovations. Most people with their first homes do not ever think about those expenses until they move into their homes and then begin to see what they would like to change.
Mortgage and Renovation Dollars
The FHA mortgage program has a solution for first time homebuyers who want to buy a new home, but realize that there are changes that will need to be made to the home. The FHA 203k mortgage is designed just for this purpose. The mortgage finances the home and provides the first time home buyer with the financing to make the renovations to make the house a home. You do cosmetic work, like add new paint or carpet or you can do major renovations in bathrooms an in the kitchen.
Many Steps to Get 203k Mortgage
The 203k mortgage is not as easy to apply for as a traditional mortgage. There are several more steps to this mortgage because of the fact that renovations will be performed. So, if you wish to use this mortgage to pay for your home, you will need to contact the appropriate people who can help you complete the steps for this loan program. There are people all over the country who know how to help first time home buyers apply and receive approval for the 203k mortgage program. Cities and other municipalities like these mortgages because they put owners into HUD homes that may have been abandoned for years.
Great Deal for Young and Single Home Buyers
Since first time home buyers are usually young and single, the 203k mortgage is a great deal. Home buyers can get a great deal on a home, so the mortgage payments will be very small. They will also be able to afford the necessary renovations on the home, which will make it a very nice home once the renovations are complete. Your FHA 203k mortgage will include the price of the renovations that you need as well as the price of the home. Even with the renovation dollars included in the mortgage, your payment should be much less than if you were to buy a new house.
For many new home buyers, after they have put the down payment on their home and paid the closing costs, they do not have much money left over for repairs and renovations, especially if they have purchased an older home. With the 203k mortgage, new home buyers who may not have much extra money can make their newly purchased homes exactly the way they want them without having to spend all of their savings or having to borrow money from their parents, from high interested credit cards, or from getting another loan from a bank.
Begin Work Immediately
Once a new home owner has the 203k mortgage, he or she can begin work on the new home immediately. It will be easy to find contractors who will want to do the work because they will have a guaranteed payment and they will get to work on a property that will be cared for after their job is done. The home owner will be guaranteed that the contractors will do quality work, too, because the inspectors that work with the FHA 203k mortgage program will need to inspect all of the work that was done on the property before the funds can be released to the contractors.
Six Month Time Frame
When an FHA 203k mortgage is granted, the home owner does have a limited amount of time to get the work completed. The mortgage stipulations include that the work must be done within six months of the mortgage being granted. This does not give the home owner much time if a lot of major renovations that need to be done, so many of the renovations may need to be done simultaneously.