FHA 203(k) Rehab Loan - a loan to help that "Fixer Upper" you just found

Have you found a home to purchase which you think would be just perfect, if only you had the extra cash to rehab it and bring it up to livable standards?

It can be hard for many to not just come up with a Down Payment for a new home, but add on top of that all inspections one may want to do during Escrow and the additional Closing Costs ... how does anyone have money left over for repairs which are necessary on so many distressed sales?


The FHA 203(k) Rehab Loan could be exactly what you are in need of.  Read below:

Home buyers thinking of purchasing a distressed property in need of repair, but who are concerned that the cost of the repairs could drain their savings account may qualify for the Federal Housing Administration’s (FHA) 203(k) rehabilitation program.

• The FHA’s 203(k) rehabilitation program provides loans for covering renovation costs as well as the purchase price of the primary residence.  Investors are not eligible for this program.  Additionally, similar to traditional FHA loan programs, the rehab program allows for a down payment of as little as 3.5 percent.
  

• A common misperception about the program is that the house needs to be unlivable.  Realistically, the property just needs to be outdated, according to a lender familiar with the program.  The property “just has to appraise below market value and then at market value with the repairs.”
  

• Improvements deemed “luxury” are ineligible; however, the program has a wide range of definitions for “repairs” and “modernization.”  Covered repairs include items such as a new roof or heating system, as well as decorative changes, like replacing vinyl with ceramic tile on the kitchen floor or painting the interior.
  

• In addition to putting down at least 3.5 percent of the current value of the property, buyers also must use a HUD-approved lender, appraiser, and a contractor approved by the lender for the repairs.  One list of approved businesses can be found at 203kcontractors.com.
  

• Borrowers considering the FHA rehab loan program should be aware that loan rates typically run around a percentage point higher than conventional loans, and come in 15- to 30-year terms, either fixed or adjustable.  Additional paperwork for inspection, appraisal, title updating, and the like can increase closing costs by $1,000 or more higher than the average.
  

• For additional information about the FHA 203(k) rehabilitation program, please visit http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm 

  Market Matters is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide.
  

Contact me if you are thinking of purchasing a home which needs some extra money put into it to become livable.

And if you are interested in finding distressed and/or foreclosed homes in the Santa Clarita Valley, email or phone me and ask to be put onto my DAILY AUTOMATED SEARCH SYSTEM which will send your personal home search criteria directly to your email in-box daily.  (Click this LINK to see an example of a personal Automated Search Page)

No matter where in Santa Clarita you are looking, it would be my pleasure to help get you into a home you will love!

LeeAnn Bell, REALTOR(R)
661-309-2364
LeeAnnRealtor@yahoo.com

DRE License #01260650

Comments Welcome

(c) 2010 LeeAnn Bell