Benefits of the 203K Loan

By
Real Estate Agent with Allison James Estates & Homes
https://activerain.com/droplet/4MvF

One Solution

Do you ever want to feel like you’re at an expensive spa, but right in your own bathroom?  Imagine yourself sitting in a bath tub enjoying a warm, fragrant bubble bath. A glass of champagne is in your hand, relaxing music is playing in the background, scented candles are lit, and it smells amazing!   Now let's do a reality check: your bathroom space is small, the floor is slippery, leaking pipes are a problem.  Because of poor ventilation you have a mold problem.  Basically, your bathroom is nowhere near the ambiance of an expensive spa. Truth is your bathroom needs help.

Now go look at your kitchen. You keep saying to yourself," I would love to be able to invite friends over, but my kitchen needs. . . .”(you fill in the blank).  ”One day when I have the money I’m gonna get it upgraded” - or something along those lines. You and anyone who has ever visited your home know your kitchen needs an upgrade.

Or, maybe you’re looking to purchase a foreclosure or short sale property.  It needs rehabilitation, but you cannot afford to take on another loan.

It’s time to put an end to all the wishful thinking and embarrassment your home may be causing you. No matter which of these is your scenario, there is ONE SOLUTION to them all!  The 203K loan.

 

What Is the 203K Loan?

The 203K loan has been around since the ‘70s and is part of HUD’s program for the rehabilitation and repair of single family properties. The 203K insured financing program is used to expand home ownership opportunities and for community and neighborhood revitalization.  This is a loan that allows you to remodel, upgrade or repair a newly purchased home or your existing home. What makes this loan even more attractive is that it can be coupled with certain other State and local financial resources such as down payment assistance programs to help borrowers. You can also use it for the purpose of making your current home ready for sale.

 

(Just a Few) Benefits of a 203K

When a buyer wants to purchase a house that needs rehabilitation, they will usually need financing to buy the house, plus additional financing to rehabilitate the house which usually has high interest rates and a shorter amortization period. With a 203K loan, borrowers can get a single mortgage loan - whether at a long-term fixed or adjustable rate - to fund the buying AND remodeling of the property. The mortgage is based on the value of the property once all the work is completed and takes into account the cost of the work to be performed.  This projected valuation of the property (once all work is complete) can result in instant equity for the homeowner.

For sellers, the 203(k) loan allows the home to be sold to more buyers if it otherwise would not qualify for a standard FHA.  Repair costs are rolled into the loan, thus not requiring the seller to pay for repairs out of pocket. Also, sellers won't need to go off and back on the market due to not passing HUD/FHA standards, provided that an inspection is performed by an FHA Compliance Inspector (not an appraiser), or a 203K Consultant performs a Feasibility Analysis.

 

Properties and Improvements Eligible for 203K

An eligible property must be a 1-4 family dwelling that has been completed for a minimum of 1 year.  Homes that have been or will be demolished also qualify, but the existing foundation must remain in place.  Converting a 1 family dwelling to a 2, 3, or 4 family dwelling; or, an existing multi-unit dwelling decreased to a 1-4 family unit also qualify.

If you purchase land, an existing house on another site can be moved to that mortgaged property.  Even a "mixed use" residential property can qualify with specific conditions.

With some restrictions, individual units in a condominium project are eligible; however, the condo community must be FHA approved.

Eligible Improvements include (but are not limited to): expansion, painting, repairs, room additions, decks, heating, ventilating, and air-conditioning replacement.  Structural corrections are also eligible. 

Luxury improvements are ineligible.

May all your home fantasies come true!

Click here for more information about the 203K loan

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Baltimore REO Foreclosures and Short Sales Market
Tags:
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Rainer
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Greg Steffens
Mountain Country Realty - Lake Arrowhead, CA

Welcome to Active Rain and congrats on your first post.  Be sure to spend some time looking around at what and how others are blogging here - it is a great education and lots of fun.  Looks like you’re off to a great start…keep it up!

Sep 16, 2013 06:07 AM #1
Rainmaker
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Ken's Home Team LLC. | 360.609.0226 | Portland, OR & Vancouver, WA Real Estate Team
Ken's Home Team LLC. - Vancouver, WA
- SOLD IS OUR FAVORITE 4 LETTER WORD -

Welcome to Activerain from from all of us at Ken's Home Team. I think you will find this site to be a wealth of knowledge and referrals. This really is the best real estate blogging and real estate network on the internet. If you have any questions about Activerain, reach out to the wonderful Ambassadors here in the rain. (They are a wealth of knowledge and were picked by the Activerain staff for their willingness to help others.

Sep 16, 2013 12:34 PM #2
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Todd Clark
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Welcome to Activerain and I hope you are learning a lot and if you ever need any assistance, don't hesitate to check out my blog, email me, call me, I will be glad to help you in any way possible. Also, check out the main page of Activerain and look for the Activerain University tab, there are lots of educational webinars to help you build your business.  

Sep 16, 2013 12:39 PM #3
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