Are home loans available to cover repair costs?

By
Commercial Real Estate Agent

Do you have more repair skills than cash?

If you would like to purchase a home and get a great value, you might be able to get a loan for the home of your dreams with the help of 203(k) rehab loan insurance.

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As long as the After Repair Value (ARV) of the home is MORE than the amount you need to borrow, getting a loan with the help of 203(k) loan insurance might be the way for you to go.

Example:
$25,000 - Home Purchase Cost
$35,000 - Home Rehab Cost

$60,000 TOTAL COST

$125,000 - Home Value AFTER Repairs

Ordinarily, a lender will be concerned about making a loan on a property for more than they can resell the property immediately on today's market, because if the borrower defaults on the loan, the lender has no way of recouping the costs.

However, with the help of 203(k) rehab insurance, the lender is covered for both the initial home purchase price AND the rehab costs, even if the borrower defaults on making payments on the loan.

This is really good for the buyer, also, because it is possible to get more house for the money since many people do not want to buy a home, only to make repairs after moving into it.

This is also good for the neighborhood, also, because it encourages people to buy and fix properties, removing eye sores from the neighborhood.


Of course, there are restrictions, but many people do not realize they can do this, and they can get a lot more home for the money through this (loan insurance) program.

The total loan amount cannot exceed the After Repair Value of the house (the value once repairs are done).

The cost of the rehab must be, at least, $5,000, or it can be as extensive of an entire reconstruction, as long as the existing foundation of the home remains.

For more details, you can visit the US Housing and Urban Development site:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203k--df

If you are a true handyman, this might be a great opportunity for you.

Call for More Info: (248) 569-1486

 

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Rainmaker
1,526,918
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

This is a good program for those with the skills or the inclination to oversee the work.

Nov 08, 2013 08:45 PM #1
Ambassador
2,692,080
Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services
Great post Nakia Thank you for sharing and have a great day!
Nov 08, 2013 10:06 PM #2
Rainer
6,954
Kay Francis Woods
Southfield, MI

@Gary: Good point.  If you are NOT someone who can tolerate (or is able to do) any repair work, buying a home with this type of loan is NOT for you.  If you are, it's a really nice resource.  Thanks for commenting.

 

@Nestor & Katrina: You're welcome.  Enjoy your day, also.

Nov 09, 2013 10:07 PM #3
Rainer
131,985
Barbara Gregus
CARES Consumer Advantage Real Estate Services - Sandia Park, NM
Sandia Park Paa-ko Homes
Very well done with this post Nakia. This is very informative and easy to understand. Keep up the good work!
Jan 03, 2014 09:37 PM #4
Rainer
194,270
Waynette Hoover Araj
Keller Williams Realty - Asheboro, NC
Connecting your Dreams with the Right Real Estate
Excellent post very informative thank you for sharing!
Apr 16, 2014 01:13 PM #5
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Rainer
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Kay Francis Woods

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