With the amount of foreclosures and short sales seen in recent months, many home buyers were able to purchase a less-than-perfect home at a great price, but are struggling with remodeling costs. They may not realize that they can roll the costs of upgrading their home into a mortgage refinance with FHA's 203(k) program, turning it into their dream home, said a spokesperson for Intelliloan™, an
"Many buyers now own a home that will be their dream home - once it's updated and upgraded - but they don't have the renovation funds," said
If so, she recommends an FHA 203(k) loan.
The FHA 203(k) loan program enables borrowers to finance or refinance both their home AND the cost of repairs through a single mortgage. It can cover simple upgrades all the way to major room additions for a growing family. Best of all, it allows borrowers to roll all those renovation costs into your home loan at a much lower interest rate than what's normally available with a HELOC or other short-term loans.
According to Tucker, here are some more benefits of an FHA 203(k) home loan:
• Only 3.5% down payment required.
• Borrowers with less than perfect credit may qualify, because FHA qualification requirements are more flexible than conventional loans.
• Borrowers save time and money upfront with only one loan application and one set of closing costs, since the mortgage and home repairs are rolled into one loan.
• Borrowers may save money in the long-run. "By including repair costs in your home mortgage, you pay for these improvements over time at a much lower interest expense than conventional alternatives," she explained.
• Home buyers may find a better deal. Rather than paying a premium for a home in “perfect” condition, buyers can take advantage of great prices available on foreclosures or other homes on the market that are in need of repair or remodeling
"Many people believe FHA's 203(k) loan is only for a home purchase, but that's not true," Tucker explained. "If you love your home and don't want to move, but it needs renovation, from a list of minor projects to a major room addition - you can refinance and roll the cost of those home upgrades into your new loan."
She went on to explain some conditions: The maiximum Loan to Value after imporovements is 110% (of the improved value), there are restriction on how much you can spend on things like pools, there must be a 10% repair contingency reserve for cost overruns.
"What's the upside to an FHA 203(k) loan? You finally get the home of your dreams, at a much lower rate; plus, the value of your home rises significantly, allowing you the option of refinancing again in the future to pull out some cash to pay off higher interest debt, pay for college, and so forth," she concluded.
• Regulated by the
• Not all branches are licensed in every state; please contact your local office to determine eligibility.
Read the full story at http://www.prweb.com/releases/2014/02/prweb11563991.htm
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