FHA 203 K Loans
I recently read an article about an FHA 203K loan. I had not heard of this so I thought that I would post about this.
An FHA 203K loan is designed to help build neighborhood revitalization by helping people finance the repair and upgrade of their homes. In order to qualify for this type of loan, the subject property must be a single family home, more than a year old with up to four bedrooms.
The following steps must be followed in order to do this type of loan. Any questions concerning this should be directed to an FHA approved lender.
- An energy audit must be completed by a qualified professional approved by the lender. The homebuyer can choose which improvements they want to make. One caveat is that the installation of smoke detectors and upgrading the HVAC to a more efficient level may also be required.
- Bids for the work must be obtained and firm prices must be established with the contractors. The lender will then add the amount to the loan.
- Once closing is completed, the lender sets up an escrow account for the money to be disbursed to the contractor when all work is completed. The mortgage payment may be slightly higher, but the energy savings from the improvements usually offsets the difference.