A rehab loan which is also referred to as an FHA 203k is a loan, is a mortgage that includes the costs of rehab/remodeling needed to a home. Why would purchasing with a 203k be beneficial? In a tight market like this it is always great to have options. For many of you who are out there in the market and having a tough time finding a home or having a chance to even put in an offer. Here is some food for thought, is there a specific style that you are drawn to but are noticing that in your price range they move quickly? Here is an option, how about looking in a lower price range, same and/or similar model of your favorite home,put on your ” see potential” glasses and then look at a property. Would just a little TLC (new flooring, paint, appliances, kitchen cabinets, etc.) make the home more appealing? This is where a rehab loan such as a FHA 203k loan or Conventional Rehab loan would make sense.
The rate on a FHA 203k is a lower interest rate than getting a new credit card, adding a home equity line of credit or financing through a personal loan. Plus you only have one mortgage payment!
There is only one appraisal done, you get an “as-is” value and the appraiser gets a copy of the contractors bid and will take into account what work is being done on the home and will give you an “as completed value”. You will see what amount of value you are adding into the property and most likely could be walking into the property with build-in equity.
So if that is not enough of a reason to look into a rehab loan, here are 3 reasons you should consider:
- Can’t obtain traditional financing for the home you want to purchase because needs health and/or safety issues addressed
- Home is in need of upgrades (kitchen, bath, appliances, HVAC, etc.)
- You can fix up the home now vs. later
If you would like to discuss or see if you qualify, give us a call.