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The FHA 203k Mortgage Facts - Turn an Old House Into a New Modern Home

The FHA 203k Mortgage Facts - Turn an Old House Into a New Modern Home

FHA LendingThere are some people who feel that a brand new home is their best option. They want to have a home with freshly applied paint, the flooring that was chosen by the new owners, a modern kitchen and luxurious bedrooms. While a new construction loan will certainly fill those needs it is also possible to get the same thing with an existing house and an FHA 203k loan.

 

Basics of the Program

The FHA 203k Mortgage and Streamlined FHA 203K Mortgage combines a purchase loan with a home improvement loan into one nice, neat Mortgage Loan package. Buyers are able to get the necessary funds to purchase the property and also get the funds to make repairs or improvements. All of the money is financed in one Mortgage Loan.

 

This is how the FHA 203K Mortgage Loan Works:

First, the buyer will find a property that needs improvements and will negotiate a Purchase Price on the property as is. Second the buyer with gather estimates on the cost to make the improvements. Next, the property will be appraised as a subject to all the improvements. Then, the final FHA 203K Loan will be calculated based on the subject to improvements property value. Finally, you will have six months after the closing to complete all the Home Improvement work.

This Mortgage Loan Program will also work as a Refinance for a property you want to keep and remodel.

 

Using a Contractor for Improvements

For people who know before the purchase is final that they wish to have major renovation done to the home it is best to consult with a contractor during the mortgage application. The contractor can inspect the home and make recommendations about needed repairs as well as provide an estimate for improvements. These figures are then used by the mortgage lender to determine the overall loan amount and to make certain that the buyer will be approved for the total mortgage.

 

Improvements that qualify under the 203K Mortgage Loan:

There are two main types of FHA 203k mortgage loans. The first is the regular FHA 203k, which is given for properties that need structural repairs such as:

  • New roof
  • Full Kitchen Remodels
  • Laundry Room Remodels
  • New floor-covering
  • Building a new patio or deck
  • New gutters and downspouts
  • Improvements to the landscape
  • Finishing the attic space or basement in order to increase usable square footage
  • Second Floor Additions
  • Room Additions
  • New Plumbing
  • Air Conditioning Systems

The second is the streamlined FHA 203k, which is Limited to a total of $35,000 and is given for non-structural repairs such as Flooring, Painting and New Appliances and Bathroom updates to name a few…

As a general rule, the items that are not allowed to be financed through the 203k loan are “luxury” items, such as a new swimming pool or adding a tennis court.

 

Financing from FHA

While the 203k loan is quite different from a normal purchase loan approved via FHA rules, the rest of the financing is quite similar. Borrowers only need to pay 3.5% as a down payment and the money can be a gift from a relative. The interest rates are at historical low values and the rates are fixed for the life of the loan.

The FHA 203k program is ideal for people who wish to live in a particular area but are having trouble finding available land for a new home. They can search out a property that needs a bit of work and buy the home knowing that FHA will help them turn the property in to a dream home.

 

   

 

Questions, Comments or For more information you can email Christian Penner at TheMortgageTeam@ChristianPenner.com or visit us online at www.ChristianPenner.com or you can call us directly at: 561-316-6800

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The FHA 203k Mortgage Facts - Turn an Old House Into a New Modern Home


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Christian Penner
South Flagler Drive, Suite 800, West Tower West Palm Beach, FL 33401

Phone: +1 (561) 316-6800

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ChristianPenner.com
http://www.christianpenner.com/fha-203k-mortgage-facts-turn-old-house-new-modern-home/
The FHA 203k Mortgage Facts - Turn an Old House Into a New Modern Home

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