The FHA has a loan program that does a really great thing for homebuyers. It allows them to actually purchase the home that they want. Many homes on the market right now are not selling well because they drastically need repairs and updates. People who are house shopping want to find something affordable, but with great new features rather than old dated, worn down features. Nobody wants to find the seemingly-perfect-on-the-outside house, and then walk into a kitchen straight out of the 70s.
To help with this, the FHA's 203(k) loan program allows homeowners to choose the house, choose the neighborhood, and choose their own upgrades. They are given the ability to pick out the new carpet, paint, cabinets and appliances that would go into the house. This helps to make the properties much more marketable and it helps to make sales happen faster. Usually, a homebuyer cannot afford to remodel or make improvements to the home right away, which often turns them away from buying it altogether. But thanks to this loan program, it is possible to buy the home of your dreams.
The 203(k) loan program is basically a renovation loan. It was designed specifically to help borrowers purchase, repair, remodel and renovate the home at the same time with a single loan. It offers favorable loan terms, higher loan limits and flexible downpayment options to make it more affordable for more people.
The popular 203(k) Streamlined Loan allows for the purchase or refinancing of a home, and it also covers the remodeling costs up to $35,000. Once the purchase is made and the transaction is closed, the renovation funds are held in escrow. They are then releasted through a draw process to pay for the remodeling, but all work has to be pre-determined for the loan, and completed by approved contractors.
The FHA hopes that this loan program will help to stimulate the economy and get properties moving. If you are interested in working with this program, give us a call and we would love to help you find and update that perfect home! 1-888-883-5252.
Friday, March 2, 2012
Getting Familiar with the 203(k) Loan
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