Anyone looking for a home these days knows that there are many homes that need some work. If you find a home that you like, but it needs work, one option is a FHA 203K mortgage. This mortgage allows you to buy the home and fix it up all in one loan. The mortgage is a 30 yr fixed rate FHA loan and requires 3.5% down.
Once you have found a home that you like, you write up a purchase agreement like you would normally do. Then once it is accepted, you contact a contractor and get bids for the work that needs to be done. Depending on what is being done to the home, you may need a general contractor or you may be able to contract the work yourself. A streamline 203K is available to those that need up to about $31,000 in repairs and the repairs do not involve the foundation or the frame of the house. The appraisal is based on the house plus the repairs that are being done.
After you close on the home, the work is started. As the work is finished, there are draws done to pay for the work that has been completed. The final draw is done when the work is completed. All the work must be completed within six months of closing.
If you currently own a home and want to do some remodeling, you can also use this loan. Because it is a new loan and the remodeling is included in the loan, you do not need as much equity as you would in a conventional loan. With your own home, you can finance up to 97.75% of the appraised value after the improvements.
If you are looking for a home and it needs work or if you want to do some remodeling, this may be the mortgage that you need!
