Rehab a Home Using HUD's 203(k)
The Department of Housing and Urban Development (HUD) through the Federal Housing Administration (FHA) administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. These lenders fund the mortgage loans which the HUD insures. Note:Â HUD does not make direct loans to help people buy homes.
The 203(k) loan program is the Department's primary program for the rehabilitation and repair of single family properties. The 203(k) program is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.
203(k) - How It Is Different
Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.
When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing for the rehabilitation; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point, the lender has a fully-insured mortgage loan.
If you're thinking about buying a home in need of major or minor upgrades, the 203(k) program is an excellent tool. In order to provide value to my customers, I have partnered with two companies that specializes in helping buyers finance a home in need of rehabilition or assisting sellerâ€™s wishing to market their home to potential buyers through the 203(k) program.Â Our objective is to educate buyers and sellers on the many benefits of the 203(k) loan program.Â Our team consist of competent and experienced mortgage professionals and certified 203(k) contractors.
To learn more about the benfits of the FHA 203(k) loan program, please contact me at 301.974.7110 to learn more about this amazing program.Â Your dream home is few months away, ACT TODAY!!
Because buying or selling a home is a big decision, Bridgette Chase with Exit Bennett Realty is your Real Estate Expert in Bowie, Upper Marlboro, Greenbelt,Â Clinton, Hyattsville, Fort Washington and all other counties in Maryland such as Anne Arundel, Howard, Montgomery and the District of Columbia.Â You will have step by step guidance to access resources to make the transaction smooth. Call me today atÂ 301.974.7110.Â You are my #1 priority. Please give me the opportunity to prove it.
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Bridgette â€œKyriaâ€ Chase
Exit Bennett Realty
Chase Real Estate Solutions Team
"Helping You Find A Solution To Every Real Estate Need"
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