Monday, March 30, 2009
What Is a 203(K) FHA Loan?
Have you found a house that you love but needs some repairs to pass an FHA appraisal? Or do you have a house that you need to sell that needs some more work to get it ready to sell? In either case, if the work is $15,000 or less, then the houses may qualify for the 203(K) FHA loan.
There are only a few select lenders in Middle Tennessee that are certified to loan 203(K) FHA funds. In our current market, this has become a viable tool for people to be able to buy or to sell a home.
Here's how it works for buyers: Find a home that needs some work. Get estimates from licensed and bonded contractors (the lender will have a list of approved contractors). If the amount of repairs/replacements is under $15,000 to bring it to an average livable condition, then make an offer on the house. Here are some things to remember: (1) The appraisal value has to be the total of the contract price PLUS the repair amount; (2) The work has to be completed within 50 days of the loan application OR within 30 days of closing; (3) The $15,000 is NOT a line of credit or a second loan - the main mortgage and the repair loan are just one loan; (4) The $15,000 can be used for other things beyond basic repairs.
For sellers, talk with your real estate professional about marketing your home as a possible 203(K) FHA home.
For more specifics, check on details with your lender. If you're want to buy or sell a home that needs repairs or just needs to be improved, please feel free to give me a call or send me an email. I'm more than happy to help. Also, there are lenders I can refer you to who handle 203(K) FHA loans.