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FHA 203(k) Rehabilitation Loan |
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If you are a loan officer or broker, you're probably looking for ways to effectively deal with credit tightening, declining markets, and the disappearance of loan programs. It's possible, especially in Florida and California, that you cover areas filled with foreclosed homes that have suffered from disrepair and neglect. Banks that own these foreclosed properties are often unwilling to repair them. This makes it harder for borrowers to quality for traditional loan programs since the property itself does not meet the minimum standards to quality as acceptable collateral for most conventional loan programs.
by DirectMortgage
If you are a loan officer or broker, you're probably looking for ways to effectively deal with credit tightening, declining markets, and the disappearance of loan programs. It's possible, especially in Florida and California, that you cover areas filled with foreclosed homes that have suffered from disrepair and neglect. Banks that own these foreclosed properties are often unwilling to repair them. This makes it harder for borrowers to quality for traditional loan programs since the property itself does not meet the minimum standards to quality as acceptable collateral for most conventional loan programs.
A savvy mortgage professional can overcome this challenge and increase his or her business by utilizing one of the most powerful - yet still relatively underused - mortgage programs available: the Federal Housing Agency's (FHA) 203(k) loan program.
This loan program provides the funds necessary for both the purchase and the renovation of a home. The maximum loan amount depends on county-based loan limits determined by the Department of Housing and Urban Development. On the low side, a single family home in New Mexico, for example, has a loan limit in most counties of $271,050; while in California, the maximum loan amount for a single family home is set at $729,750. HUD county limits can be found at https://entp.hud.gov/idapp/html/hicostlook.cfm.
Some downsides to the 203(k) loan are the extra work and time it takes. However, although there is more involved in completing a 203(k) purchase than a traditional loan, most 203(k) loans can close within 30-60 days from beginning to finish. As to the additional effort that is required, that extra work can translate into a sale that you wouldn't have otherwise had. Thus in the case of 203(k) loans, more work equals more money.
Here are some of the potential benefits of a 203(k) loan:
* Repairs Under $15,000 do not require 3rd party inspection (Streamline-K).
* Increase maximum mortgage by up to 20% with the installation of qualified solar energy equipment.
* Up to 6 Months with NO PAYMENTS -- Not to exceed time it takes to complete the construction.
If you want to increase sales in a market filled with REO listings, the FHA 203(k) loan can be a useful tool.
About the Author:
If you're looking for a Mesa mortgage or would like to learn more about obtaining a home loan, visit the Direct Mortgage website.
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