203k/Rehab Loans….

203k-rehab-loans

At Mortgage Solutions of Georgia, we understand that just because a home needs some repairs or remodeling, doesn’t mean it’s not the right home for you. With that in mind, we have worked hard over the years to become well versed in the FHA 203K rehabilitation home loan program. This is a federally insured loan program that allows a client to purchase a home that requires repairs or remodeling or refinancing a home they already own to complete repairs as well.

The 203K loan allows a client the ability to purchase and have escrows funds for repairs in one loan instead of being required to finance them separately. There are certain guidelines and restriction in place that make it advantageous to work with a mortgage company that has the experience to help you avoid mistakes that can cause delays or even a denial on this type of loan.

Basically, a home improvement loan, the 203K program is HUD’s program to help home owners revitalize properties that may be distressed or in need of repair. There are two basic options available through this program, a “full” 203K loan or the streamline version. The “full” 203K loan requires the involvement of not only a licensed general contractor, but also a certified 203K consultant.

These loans are required if repair costs are over $35,000 or if the repairs to the home are considered structural. The streamline version of this loan does not require the consultant, but does normally limit total repair costs to $35,000. Not offered by all lenders, the 203K program has become very popular due to the heavy amount of foreclosed properties available in today’s housing market. Many times these homes are not left in ideal shape or have been sitting vacant for a prolong period of time. Most other loan types will require a property to meet certain standards of condition prior to closing of the loan.

The 203K loan offers clients the ability to close prior to the repairs being completed and have those repair costs set aside in an escrow account to be dispersed to the general contractor completing the repairs once they are finished. 203K loans are restricted to primary residences only.

Benefits of Using a 203K Loan to Purchase a Home
-Purchase a home in need of repairs and close prior to repairs being completed
-Have the repair costs included in loan at low rates
-Have ability to put down 3.5% down payment using FHA insurance
-Seller is able to pay 6% in closing costs
-Up to 90 days allowed to complete repairs
-10% contingency built into escrow amount for unforeseen additional repair costs
-Ability to qualify with less than perfect credit due to FHA insurance backing.

Benefits to refinancing with a 203K loan
-Use the 203K loan for repairs or for updates
-Work with the general contractor you choose
-Structure the loan based on the appraised value after repairs complete
-Refinance up to 97.75% LTV
-Have the repair costs included in the loan at low rates
-Qualify with less than perfect credit

A 203K loan can obviously be a great tool to use when looking to buy a home that may not be in perfect condition. This loan requires a knowledgeable loan officer that can take a client from start to finish in a timely manner.

Contact us today to get started on your rehabilitation loan today. Mortgage Solutions of Georgia, your 203K loan experts! 770.924.1111

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