A 203(k) loan is a great way to go when buying a HUD home. Often HUD homes are lacking appliances and as long as the property still qualifies for FHA backed financing, the 203(k) can fund your appliance purchase. The amount borrowed is combined with your loan on the property so you pay off the cost of the appliances over the term of the loan. And the 203(k) can also be used to pay for repairs.
FHA 203(k) Loans on the RiseThe FHA-backed 203(k) rehab loan is an increasingly popular option in today’s market because so many available properties – especially foreclosures – are in need of repair.A streamlined 203(k) provides money to pay for improvements such as a new roof, appliances, furnace, energy-efficient windows, and cosmetic improvements like carpet, paint, and remodeled kitchens and baths.The maximum loan available is $35,000. The buyer must put down 3.5 percent of the acquisition plus repair costs. At closing, the seller is paid and the remaining money goes into an escrow account to pay for repairs.A licensed contractor must complete the work within six months. Some lenders allow the borrower to do minor cosmetic work like painting themselves.Source: Minneapolis-St. Paul Star-Tribune, Lynn Underwood (10/25/2009)
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Click here to learn more about the FHA 203(k) loan.
And check out our next Post which talks about the decreasing cost for home remodeling. Same as with remodeling, repair costs are also coming down as material suppliers are offering more sales to reduce inventory and keep factories running and contractors are lowering costs to stay busy.
