203k Rehabilitation Loan Agreement
FHA
Almost everyone at one point or another has taken a
look at a "fixer upper" home on the market
and visualized how great it would look after a little
(or a lot) of work. However, buying a damaged or rundown
home can be tricky, as banks want to lend their money
toward a sound investment. This leads some people to
take out a bridge loan to finance repairs before they
obtain a traditional mortgage. This can be detrimental
to their cash flow, as short-term loans usually come
part and parcel with high interest rates. However, the
Federal Housing Administration (FHA) is currently promoting
an interesting program called the 203k Rehabilitation
Loan Agreement that can finance both the land, property,
and repairs in one fixed-
or adjustable-rate
long-term mortgage.
The 203k plan is part of the Community Reinvestment
Act. Its purpose is to rehabilitate and utilize our
existing housing. In doing so, they are revitalizing
many depressed neighborhoods across the country, and
giving access to home ownership for thousands of people.
It can be used in three ways: to purchase an existing
property and house for rehabilitation; to purchase a
house on another property and bring it to a new foundation
at an already-mortgaged property for rehabilitation,
or to refinance a property that is currently owned and
rehabilitate it.
The housing in question must be a one- to four-family
dwelling at least one year of age. It must adhere to
all zoning codes, and any newly constructed outbuildings
must be attached to the original structure. It applies
to houses, condominiums (with restrictions), and even
multi-use properties--if the commercial use is restricted
to a certain percentage of the dwelling, and the funds
are used only for the residential portion.
Cheering Up Depressed Neighborhoods--FHA's 203k Rehabilitation
Loan Agreement
The size of the mortgage is based on the projected value
of the house after all improvements have been made.
The cost of the work to be done is also factored in.
To get more information or to apply for the FHA 203k
Rehabilitation Loan, contact an FHA-approved lender
in your area.
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