We all have heard about the negative news lately about the real estate market and the glut of home foreclosures on the market. You may be thinking now is the time to take advantage of the low interest rates and purchase a foreclosed home. But the problem may be some of the foreclosed homes you have seen need a lot of repairs and improvements. You don't have the cash to make these repairs. Well, there is good news and it comes in the form of the FHA 203K Rehab Loan.
When I refer to the FHA 203K Rehab Loan I am referring to the FHA Streamlined 203(k) Limited Repair Program. It is for improvements and repairs that don't require structural improvements. It is not for total renovation of a property but for repairs not totaling more than $35,000. The FHA 203K Rehab Loan did have a minimun of $5,000 costs of repairs, but that has been eliminated.
There are many benefits for using a FHA 203K Rehab Loan for improvements to a house you are planning on buying. Also, you can use this FHA Loan Program to refinance your existing mortgage and do repairs and improvement to your existing home.
Some of the benefits of a FHA 203K Streamlined Rehab Loan Are:
1. The borrower can take out just one mortgage to cover both the purchase of the property and the cost of upgrades. This loan can be amortized over 30 years, unlike a conventional rehab loan that has a shorter amortization period and higher interest rates.
2. Like I said before that there is no minimum cost for repairs. You could use it only to put in an energy-efficient furnace.
3. There are many different repairs and improvements you can use the loan for. You can read an article on the list of improvements by clicking on the links at the bottom of this article.
4. This is not a government loan, it is a FHA insured loan. There are a lot of FHA Approved Lenders across the country. Because it is insured by FHA, the FHA Approved Lenders are more willing the make the FHA 203K Rehab Loan.
5. On of the biggest benefit is the low down payment of 3.5%. Most conventional rehab loans require a 20% down payment.
6. Lower interest rate. Because FHA insures the loan, FHA Approved Lenders can make loans to people that don't have perfect credit. That doesn't mean any one can get a loan, you still have to prove you can pay the loan back.
7. The FHA 203K Streamline Loan eliminates the need for a consultant, engineers, plans, and consultant’s fees. This speeds the process up and lowers the costs of the improvements.
As you can see if you are considering buying a home that need repairs or want to make improvements to your own home, the FHA 203K Rehab Loan could be just what you are looking for.
