You don't have to go far to see a rundown house, a foreclosure sign, a vacant property, or a home that's got yellow signs in the window saying that it's under possession of the bank for some reason or another. Distressed properties are available en masse after the recent market crash and everyone is trying to come up with a solution. There are a lot of people who see the great deals and wish that they could buy such a home, but because of the risk you almost always have to have cash because lenders won't loan money to you.
That leaves these homes to the investors, which can be disheartening for a lot of people. With a specialty loan, however, more average people can actually get their hands dirty and get into home ownership. What you're looking for is the FHA 203k loan. This mortgage is especially for people who are looking to buy a home, but they might not have enough to buy a "ready" home. They might need to stick with something cheaper, but they don't have the money to fix it up. The 203k loan allows them to get money for the purchase price of the house along with a lump sum for the repairs and renovations that need done. This gives them the chance to own a home and helps the community by getting rid of a distressed property, so it's a win-win for everyone.
Some people are unsure of their abilities and needs when it comes to a specialty loan like this. Imagine being able to rebuild and reconstruct the house that you buy. It's a lot of work, yes, but you can guarantee that it's all done right by licensed professionals because the lender isn't handing out the money until the work is done right. They keep the repair funds in escrow and pay people as the jobs get done. This keeps you from dealing with shady contractors or having bad services done around the home. Plus, it lets you create the home that you've always dreamed of, no matter what you have in mind. The only real stipulation in the loan with repairs is that you can't upgrade to luxury improvements. You just have to fix things with average things.
If you are looking to buy a home, the power is in your hands right now. You can pick and choose from thousands of properties that need a little (or a lot of) TLC and that will give you a chance to create your own dream. There is so much that you can do when you get a cheaper home, and it's definitely worth checking into. Talk to an FHA 203k consultant or get the facts from the Federal Housing Administration about this lending program and what it can do for you. Buying a foreclosure home might be just what you need and there are plenty of benefits that you can appreciate as a result of getting this type of loan instead of a traditional home loan.
There are two types of loans:
- Streamline loans, which are for non-structural repairs, allowed up to $35,000.
- Standard loans, which are for structural repairs, allowed up to $35,000 max or 110% of the property value, whichever is lower.
Both of these loans are for residences, though. You have to live in the home, or plan to live in it, if you are going to get approved for this type of funding. If the home is too damaged to inhabit right away, you can qualify for a mortgage adjustment where you will be given six months of payments so that you can live elsewhere while it's being worked on. All in all, this is a great way to make your home ownership dreams come true if you are looking for something different. Just remember that it takes time and you should get as much help as you can.