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Friday, May 31, 2013

Benefits of FHA 203k Mortgage Program

The FHA 203k loan is the vital government sponsored program for the refurbishing and rehabilitation of single-family properties. Essentially, it's just but a glorified home enhancement loan. The 203K mortgage is a remarkable tool for community revitalization.
Where can you apply the FHA 203k loan?
You may use FHA 203k rehab mortgage to purchase homes (including the land it stands on) for residential purposes and renovate all with a single loan. You may also use FHA 203k loan to buy an eligible property on a different site, convey it onto your new mortgaged property, and repair it. Other FHA 203k loan qualifying properties can be sourced through REO (properties owned by banks), short sale properties by the MLS and eligible homes from the HUD register.

However, the FHA 203K loan is not only meant for purchasing a home. If you are an eligible homeowner, you can effectively use this program to refurbish your primary residence. Once more, it is in essence a construction loan for upgrading existing homes.
How beneficial is FHA 203k rehab loan?
Nearly all regular mortgage programs only offer you "permanent" financing which implies that the financier will not fund the purchase of the property unless it is ready to be funded as-is. In case that property needs to be improved or repaired, several financiers will require that you do this prior to the financing deal with the lending institution. You can do the repairs from your pocket before purchasing the property; however, with the FHA 203k mortgage program you don't need to.
When you are applying for an FHA 203k loan, the property valuation will be based on the post-repair value and comprises an escrow account to repair the property to the lenders' preferred condition.
Now, considering the many REO homes in the market requiring repair, it is clear that "regular" FHA mortgage would pose a problem if it were the only mortgage you would access for REO and rehab properties.
FHA 203ks are safe and easier to manage when compared to the other forms of financing; moreover, their lenders are usually protected.
Since FHA 203k mortgage funds both the rehab and purchase costs in a single mortgage loan, it is nowadays one of the most popular mortgage options. In addition, the eligibility standards are quite similar to those in the FHA loan guidelines -making financing through an FHA 203K rehab mortgage very attractive.

1 comment:

  1. 203k loan is designed to help home owners who are in need of financial help for home repairs, renovation, and even new purchase. Get help from the experts and be guided every step of the way. Check out www.cfs203k.com.

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