First time home buyers find themselves in a unique position relative to the current housing market. Mortgage rates are at historic lows and there is still an inventory of undervalued vacant homes for sale.
An FHA 203K Rehab loan is designed to give the home buyer the ability to purchase an undervalued vacant home at a great price and apply up to $35,000 in updates to the home to make it like new again.
The advantages to first time home buyers include the ability to make sure the home is equipped with energy efficient products like windows and siding. You can also customize the interior of the home with the latest appliances that are built to last years. While you are at it, why not put some extra touches on the house with flooring, counter tops, cabinets and updating the bathroom.
As long as you can fit the updates into the budget you can pretty much do anything you want with the home that does not affect its structure.
The FHA 203K Rehab loan does require a little extra work that some first time home buyers just don’t have the time for. The loan requires you to obtain bids on the repairs that need to be done to the home; this also includes your wish list of items you want in the home.
To obtain your bids you will need to meet with a general contractor who will help you determine the guidelines for the required repairs set by the city and FHA. At this time you will figure out the costs for the repairs needed. If the cost of the required repairs is less than the $35,000 budget, you may choose to use the remainder to upgrade anything else in your new home.
After your loan closes you should give your general contractor a minimum of 2 weeks to take care of the interior repairs and upgrades in the home. This will give the contractors the space they need to work and present to you your new home in mint condition.
Even though there is more work required to obtain an FHA 203K Rehab Loan, it is a great tool for first time home buyers who want to purchase a new home with all the updated features a new home should have in it.