If there is one thing you can always say about life, it's that change is inevitable. With certain changes, memories get created while other changes are those that we would just as soon forget altogether. Throughout it all and regardless of these changes, your home is the one aspect that always remains constant. Despite the fact that it was once your dream home when you purchased it 10 or 20 years ago, something is lacking today. So is it time to sell your home and move into a newer one or should you take out a renovation refinance loan?
Renovation refinance loans are more commonly referred to as FHA 203k loans and are offered through the US Government's Federal Housing Administration. The initial purpose of these loans was to encourage banks and other lenders to provide funds for the purchase of seemingly risky homes. However, the creation of 203k loans was driven by the need to provide more individuals with home buying opportunities and to revitalize neighborhoods that were badly in need of renovation and repair.
FHA 203k loans are available in two forms, namely regular or streamlined. If your home is in need of structural repairs, you would apply for a regular 203k loan whereas the streamlined 203k loans are for homes that need repairs of a non-structural nature. The key features of this loan include:
- Applies to 1 to 4-unit primary owner-occupied homes
- Covers expenses such as fees and permits as well as labor and materials
- Down-payment as low as 3.5%
- Includes those renovations and repairs that will increase the home's value
To qualify for this type of loan, you will have to live in the home that you are renovating. However, the types of residences that can qualify include:
- Condos that have been approved for an FHA loan
- Existing construction (must be at least 12 months old)
- Homes in need of a new foundation
- Properties designated for mixed-use (mixed residential/commercial properties will qualify if only the home portion of the property will be getting repaired)
- Single-, two-, three-, or four-family homes
- Tear-downs or homes that need to be completely rebuilt (part of the foundation must remain intact)
The 203k loan enables you to borrow not only the home's purchase price but the funds needed for renovating as well. Best of all, it involves a single loan and closing costs.
Sometimes, the best move that you can make is not to move at all and stay where you are currently living. Sometimes all you need may be the addition of a little more space or just remodeling a couple of areas within the home such as the bathrooms or the kitchen. There are certain features and benefits to be aware of such as no pre-payment penalties and only a single set of closing costs.
Whether you are adding more living space, putting in a swimming pool, or just remodeling a part of the structure, this can make a huge difference where the enjoyment of your home is concerned. Even more important is the fact that these projects can increase the value of your home as well. So if you are basically happy with your home, there is no need to uproot the family and move ... just improve and start enjoying your home like you did when you first bought it.