203k Loans, Turning “Fixer-Uppers” into Dream Homes
Consider the 203k Loan:
To make your home your Dream Home! The 203k Loan lets you finance the purchase of your home (or refinance your current mortgage) including the cost of its repairs all rolled into one loan with one monthly payment.
Therefore with the 203k Loan, you can;
- Remodel the bathroom and kitchen, including new built-in appliances
- Add energy efficient windows or doors
- Repair the swimming pool
- Replace the floors - tile and carpet
- Add a second story, family room, bedroom, bathroom, porch, deck, and patio
- Add or repair siding and repaint the inside and outside
- Correct structural problems, including chimney repair or termite damage
- Replace the roof, gutters, and downspouts
- Upgrade plumbing, heating, air conditioning, and electrical wiring
- Install a well or septic system
- Eliminate health and safety hazards (such as lead-based paint) and make your home accessible to the disabled
- Complete a basement, convert an attic, and expand or build a garage or carport
To be sure, these are just some of the things you can do using the 203k Loan. You can select some of them or all of them. It's your Dream House; the choice is yours!
Let us see How 203k Loans works.
- However, the property must be used as a principal residence by an individual or family
- You take out the loan as a 15 or 30 years fixed rate mortgage, or as an Adjustable Rate Mortgage (ARM) from a HUD-approved lender.
- The total amount of your mortgage is based on the projected value of your home after the renovation project is completed, including the cost of the work.
- A portion of your loan used for the purchase of the home (or to pay off the existing mortgage in case of a refinance)
- The remainder goes into an interest-bearing account on your behalf and is released in stages as renovation progresses
- FHA requires that a minimum of $5,000 of eligible repairs or improvements and that the repairs finished within six months after loan closing
Make 203k work for you!
First, find the property that you wish to purchase, and conduct a preliminary feasibility analysis with your real estate professional. If you are already living in the home, you want to repair, get a HUD-approved lender to help you with the next steps and details of the loan.
Your lender will assign a 203k consultant to inspect the home, identify needed repairs or improvements and along with a work write-up and cost estimate for the work.
We can help you maximize the many benefits and advantages that are available to you. Some described here, or you can contact our Specialists for answers to other question you may have. Our goal is to help you create your piece of the American Dream and build, remodel, or renovate your Dream Home!
Is my home eligible for a 203k Loan?
Co-ops and investment properties are not eligible, however, these types of homes are:
- One-to four-unit residences completed for at least one year (detached homes and townhouses.
- Condominiums interior only), with some additional restrictions
- Mixed-use residential properties that include commercial space
- Conversion of one-unit residence into a two-, three-, or four-family dwelling
- Conversion of existing multi-unit dwelling down to one to four-family unit
- Existing house or modular unit on one site that to be moved onto the mortgaged property (some restrictions apply)
- Homes that have, or will be, demolished as part of renovation work if some existing foundation remains in place
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