Do you ever want to feel like you’re at an expensive spa, but right in your own bathroom? Imagine yourself sitting in a bath tub enjoying a warm, fragrant bubble bath. A glass of cham- pagne in your hand, soothinging music plays in the background, scented candles lit, and it smells amazing! Now let's do a reality check: your bathroom space is small, the floor tile is cracked, leaking pipes are a problem. Poor ventilation makes moisture is a concern. Basically, your bathroom is nowhere near the ambiance of an expensive spa. Truth is your bathroom needs a remodel.
Now go look at your kitchen. You keep saying to yourself, "I would love to be able to invite friends over, but my kitchen needs. . . ” (you fill in the blank). ”One day when I have the money I’m gonna get it upgraded” - or something along those lines. You and anyone who has ever visited your home know your kitchen needs a rehab - new life breathed into it.
Maybe you want to buy a foreclosure or short sale property. Many of these require some level of renovation or repair, but you don't have the money
It’s time to put an end to all the wishful thinking and embarrassment your home may be causing you. No matter which of these is your situation, the 203K is your answer.
What Is the 203K Loan?
The 203K loan has been around since the ‘70s and is part of HUD’s program for the rehabilitation and repair of single family properties. The 203K insured financing program is used to expand home ownership opportunities and for community and neighborhood revitalization. This is a loan that allows you to remodel, upgrade or repair a newly purchased home or your existing home. What makes this loan even more attractive is that it can be coupled with certain other State and local financial resources such as down payment assistance programs to help borrowers. You can also use it for the purpose of making your current home ready for sale.
(Just a Few) Benefits of the 203K Loan
When a buyer wants to purchase a house that needs rehabilitation, they will usually need financing to buy the house, plus additional financing to rehabilitate the house which usually has high interest rates and a shorter amortization period. With a 203K loan, borrowers can get a single mortgage loan - whether at a long-term fixed or adjustable rate - to fund the buying AND remodeling of the property. The mortgage is based on the value of the property once all the work is completed and takes into account the cost of the work to be performed. This projected valuation of the property (once all work is complete) can result in instant equity for the homeowner.
For sellers, the 203(k) loan allows the home to be sold to more buyers if it otherwise would not qualify for a standard FHA. Repair costs are rolled into the loan, thus not requiring the seller to pay for repairs out of pocket. Also, sellers won't need to go off and back on the market due to not passing HUD/FHA standards, provided that an inspection is performed by an FHA Compliance Inspector (not an appraiser), or a 203K Consultant performs a Feasibility Analysis.
Eligible Properties and Improvements
An eligible property must be a 1-4 family dwelling that has been completed for a minimum of 1 year. Homes that have been or will be demolished also qualify, but the existing foundation must remain in place. Converting a 1 family dwelling to a 2, 3, or 4 family dwelling; or, an existing multi-unit dwelling decreased to a 1-4 family unit also qualify.
If you purchase land, an existing house on another site can be moved to that mortgaged property. Even a "mixed use" residential property can qualify with specific conditions.
With some restrictions, individual units in a condominium project are eligible; however, the condo community must be FHA approved.
Eligible improvements include (but are not limited to): expansion, painting, repairs, room additions, decks, heating, ventilating, and air-conditioning replacement. Structural corrections are also eligible.
Luxury improvements are ineligible.
May all your home improvement fantasies come true!
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