The majority of consumers have never even heard of a mortgage known as an FHA 203k. It probably sounds more like a financial account to some people, but it is actually a new lending option that consumers can use to help with their home ownership desires. These are classified as rehabilitation loans due to the fact that they let home buyers borrow money for the price of the house and money for necessary repairs that are in order. Refinancing is also available with this loan, to give existing homeowners the help that they deserve.
Since this is an FHA loan, it's guaranteed by the government. That makes it easier to obtain. It also means that you get much better interest rates and low down payment requirements. It's all about getting more from your home loan and for the government, it's about fixing the real estate market and getting all of the distressed properties and vacant houses off of the market and back into the community. If you are considering pursuing a loan like this rather than a traditional mortgage, you'll find plenty of benefits, including:
- Lower down payment requirements, which can be paid by the borrower or as a gift or part of public assistance programs.
- Forget the high costs of home equity loans or credit lines. These used to bet eh solution for renovations, but now you can use the 203k to get one loan instead of having two or three to keep track of.
- Buying a home that's too far gone? Get up to six months of mortgage payments included in your loan so that you can live elsewhere until it's up to code for dwelling.
- There's only one closing, and the costs are much lower than with other lending options.
- These loans are extremely flexible. They can be used for single and multi-family homes as well as condos that are FHA-approved and mixed-use buildings. The types of repairs and renovations are vast. Even though you're not supposed to make "improvements" or "upgrades", you can add on, renovate entire rooms, turn a single-family into a multi-family, and so much more. As long as you are following the rules of the loan, you can do all kinds of things.
- If the home needs torn down or if the foundation needs replaced, you can still get an FHA 203k loan. This loan will allow you to build new on an existing foundation or move an old home to a new foundation, too.
- These loans are designed to restore houses that currently exist. This helps improve the environment by allowing people to use eco-friendly products and it helps keep neighborhoods intact. It also reduces the costs associated with building new construction and tearing down vacant properties.
There is a lot to like about these unique loans, no matter what you have in mind. You will need to make sure that you take the time to explore all of your options and see what's out there when you're looking for a way to finance your home. A consultant that knows all about these loans can help you figure out what you are dealing with and learn whether this is a viable option for you or not. Make sure that you take advantage of that and do what you can to get more from your home purchase.
There are some cases where people can get a traditional mortgage at a reasonable rate and buy a home that doesn't need work. However, because of the stricter lending requirements these days, it is much less common. The FHA program helps more people become home owners while helping the economy by putting otherwise vacant or distressed homes back into the community as viable places to live. Whether you want to help the economy or you just want an awesome deal on your home purchase, you should really check into FHA 203k loans if you don't mind investing a little time and sweat equity into your home.