203-k loans and Energy Efficient Mortgages
Many of us love to cut costs and or save money, right? A 203-k loan or a Energy Efficient Mortgage can help you accomplish this. When buying your new home, it's not only a place to live, a place to create fond memories, but that it's an investment. And probably one of the biggest investments that you will ever make and that you should take it seriously.
Many borrowers are unaware of such programs as the 203 k loan or the Energy Efficient Mortgage. Yes, there are similar programs that can be done with conventional loans, but they usually require a larger down payment and or better credit scores or you will be penalized. So the types of loans that I will be mentioning below are FHA loans with FHA guidelines.
Loan Descriptions :
203-k loans - There is no limit to have much in costs for repairs. Keep in mind, there are some lenders that will only allow you up to $100,000 in total costs. At Infinity Home Mortgage, we have no limit. You can even rebuild an existing house, as long as you can prove that there was a foundation prior to the 203-k loan and that there was a CO (certificate of occupancy) when first built or last sold. Here is a description of what can be included in the costs : 203-k loan repairs
203 k streamline loans (203 k or streamline k's) - The main difference with this loan compared to the regular 203-k loan is that you can do up to $35,000 in repairs and that you don't need a 203-k consultant to right up a report which does cost extra money outside of an appraisal. But many people fail to realize that the HUD consultant fee can be reimbursed through the mortgage itself.
Energy Efficient Mortgages or EEM's - Not to many people know about this type of financing. If you only wanted to repair anything energy related and or anything green, this method of financing would be a lot cheaper than using a 203-k loan, even a 203-k streamline loan. More details on Energy Efficient Mortgages. (click on the link)
Summary : Keep in mind that you must still follow the normal FHA maximum mortgage amounts for the 203-k loans and for the Energy Efficient Loans. The FHA maximum mortgage amounts per counties in each state. All of the mortgage programs above can be used for both purchases and refinances. The rates on the 203-k loans are slightly higher than the regular FHA loans. The rates are Energy Efficient Mortgages are also the same as regular FHA loans.
RUMOR ALERTS :
You will hear some people say that FHA loans and especially FHA 203-k loans will take much longer. It today's world or mortgages, all mortgages are taking a little longer. If a good loan officer has properly qualified the borrower and told them what is needed, a loan can still be done in 30 days, from start to finish. When it comes to 203-k loans, you should expect just another 2 weeks, depending on how quickly the HUD consultant gets the report back to the lender. But I will say this, not every lender is well versed on 203-k loans and you should use someone that is experienced or who has an experienced staff. At Infinity Home Mortgage, we even actually underwrite the 203-k loan in-house, which gives us a lot of control.
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For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
Important Information about the First Time Homebuyers Tax Credit
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