In this article I have given you the answers of FAQs related to FHA 203k loans.
Is it possible for the borrower to do the rehabilitation work?
If a buyer is able to show professional expertise in a particular building area, then it is allowable. The buyer can be paid for materials but he will not be paid for the labor.
What if money is left over after the renovations?
If there are any funds that are left over after completion of the renovation then these funds can be used for additional, covered projects.
If there are no additional, covered projects remain, then the buyer has to use the money to buy down the principal balance of the mortgage. The buyers never get the permission to retain unused funds.
Is there a time limit for the renovation?
Yes there is a time limit for the renovation. The renovation must begin within 30 days of settlement and it is necessary that it must be completed within the time frame that was established in the original loan agreement. The total time for completion must not be more than six months.
What if the home is not habitable during renovation?
If the home will not be habitable at any time during the renovation then a buyer cannot use streamline 203k. The funds for up to six mortgage payments can be included in the original loan under the Standard 203k loan. More extensive renovations are covered under the Standard 203k.
How do I get started?
You will require more time than usual to find a home that will work under this program. Your Realtor, your Lender, your Contractor will have to work together. For providing multiple contractors for each renovation project, a large Home Improvement Center such as Lowes or Home Depot usually posses a system in place. You can get the estimates and projections for your Streamlined FHA 203k from a reliable General Contractor.
What are the Benefits of FHA Loans?
Below I have given the list of some of the benefits of any type of FHA Loan:
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Smaller down payment – With FHA-insured loans buyers will have a low 3.5% down payment and this money can be a gift.
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Loan limit – FHA loans have loan limit of $417,000 in Chester and Montgomery County
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Easier qualification – Due to the reason that FHA insures your mortgage, lenders try to give you such loan terms that make it easier for you to qualify for the loan.
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Less than perfect credit – For getting an FHA-insured mortgage you don’t need a perfect credit. Even if you are having credit problems, such as a bankruptcy, then also it will be easier for you to qualify for an FHA-insured loan as compared to a conventional loan. You don’t have to pay an exorbitant interest rate.
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More protection to keep your home - The FHA always makes efforts for keeping the buyer in the home and avoid foreclosure.
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Low cost – Due to the fact that the government insures the loan for lenders so FHA-insured loans have competitive interest rates.
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No pre-payment Penalties - FHA loans are assumable and they do not have any prepayment penalties.
You should avoid to pay a premium for a home in “perfect” condition. Rather than that take advantage of the great prices that are available on foreclosures or other homes that require repairing or remodeling. Choose exactly according to your taste and needs.
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