Why should a FHA buyer consider a 203(K) loan?
1. You will be able to compete with investors because you won’t have to ask the seller to make repairs in order for the property lendable.
2. All-in-one loan loan.
3. Purchase price and renovation wrapped into one low cost loan. The interest rate today is 4%.
4. Preserve your cash. Instead of spending thousands of dollars on repairs or desired improvements you can keep your cash and finance the improvements.
5. Instant equity because you improved the property so you get to keep the profit that the investor would have made reselling it to you. This is a real break for you!
6. Turn-key living. The property will be completely finished so you can enjoy your new home.
Dear Sue,
I am a first-time buyer. I was so excited to get the news that I was actually pre-approved for a $200,000 loan.
My agent signed me up to automatically receive new listings. I have found several, but they all need too much work to qualify for a loan. Some of the listing agents write in their descriptions “cash only,” or “no Federal Housing Administration (FHA).”
As a result, the properties are snatched up by investors that put them into lendable condition. Then they turn around and sell them to first-timers like myself for a profit.
Why do I have to be penalized for being a first-time buyer? Why should investors get all the breaks?
~ First time Fred
Dear Fred,
Cash is, and always will be, king. Most investors have worked very hard to accumulate cash. They have earned the right to get certain breaks.
Your focus needs to be on yourself and what you can do to purchase
a new home in today’s competitive environment.
I attended a very interesting class on Federal Housing Administration 203(K) financing. The class was put on by Hybrid Homes and Paramount Equity.
The 203(K) loan is the best option when purchasing an owner-occupied home in a real estate market dominated by distressed properties. The best priced properties are short sales and foreclosures, but they often times need renovation to be lendable.
An FHA 203(K) is an all-in-one purchase and rehab loan. That means one application, one approval and one loan.
The renovation loan can be used for cosmetic purposes as well. Just make your wish list and install new counter tops, cabinets, plumbing fixtures or flooring. You name it!
There is the 203(K) “streamline” loan, which allows home improvements up to $35,000.
The streamline loan has different guidelines than the 203(K) “full” renovation loan.
One can finance up to $580,000 with a full 203(K). A Housing and Urban Development/
Federal Housing Administration consultant is required when utilizing a full 203(K) loan.
Considering a 203(K) loan is a matter of good Home $$$s and Sense.
Sue Thompson is the owner of HomeTown Realtors in Auburn. She can be reached
at seesue@mac.com, or at www.homedollarsandsense.com.
