Many are surprised to find out that you can use a FHA 203k loan to refinance or purchase a property and roll in the cost of rehabilitation and renovation. This is one of the great ideas behind the FHA 203k loan. Frequently, I receive calls from customers stating they don’t have enough equity in their home to get a line of credit or enough cash on hand to do the improvements that they would like to in their new home purchase. In a search for a company to meet their needs, they stumble onto my web-site. This is when they realize that they do have options, and the program that will fit their needs is the FHA 203k loan.
There are solutions to your home improvement problems. The answer is the FHA 203k Refinance.
If you are either looking to purchase a home or possible rehab your existing home, it is important to know the repairs you can do with an FHA 203k loan. It is not breaking news to hear that the market is flooded with homes that need work. The difficulty that potential home buyers are having is looking past the existing state of the property. Knowing the eligible repairs before you go out to see the homes will help you visualize the home in its future state. Also there are a lot of existing home owners who lost equity in their home over the past few years and by knowing the repairs that be be financed in with an FHA 203K loan will help them re-gain their lost equity.
FHA 203K Streamline Eligible repairs ( $35,000 in total repair cost )
Here are some examples of Ineligible Improvements with FHA 203K
One of the biggest concerns of first time home buyers when they’re looking at getting their first mortgage is just how much money they’re going to require. Qualifying for a mortgage is the first step in the process, but it is important to understand if you will need cash for your purchase and if so, how much.
Understanding what you’ll be responsible for paying for in cash is good information to have before you even submit a mortgage application. The specific costs can vary depending upon the state that you live in, the cost of your home and to other factors, but here are some basic things to consider that should be considered.
In order to qualify for a mortgage, you will likely have to produce a down payment unless you are using a VA (Veterans Administration) or USDA Rural Housing Loan . The specific amount required for a down payment depends upon state guidelines as well as the type of loan. FHA mortgage loans offer the competitive down payment options for those who qualify, requiring 3.5% of the purchase price down.
In addition to requiring money for your mortgage down payment, you’ll need to save money for closing costs. This is something that you may be able to get paid by the seller of your new home, but as this is not something that is guaranteed, it is wise to have some money on hand to pay for all of the costs of purchasing a home that cannot be rolled into your mortgage. If you present a mortgage lender an offer that does not include closing costs covered by the seller, often as a first time home buyer, you are required to prove that you have the money to cover them. Depending on your local market environment and location, 1.5% to 3% of the purchase price may be a fair estimate for your closing costs, and somewhere in this range is what a mortgage lender will typically need to confirm.
Since the location, cost and your unique financial and credit attributes can affect what you will need to put down when you purchase a home, we can help you better understand the estimated amount that you’ll need to pay when buying a home. More importantly, we can help you understand and target the home purchase price that suits your specific needs an finances so you can be prepared in advance to make your first home purchase!