The mortgage loan you'll need is insured by the Federal Government under the FHA (Federal Housing Administration) and provides for purchasing a home and borrowing the repair/renovation money all rolled into one loan.
The Miracle Rehabilitation Loan Known as the FHA 203k Loan
So many Buyers today are eager to purchase homes at below market prices. Often these homes are in need of serious repairs or improvements to update the property. The 203k Program handily meets the needs of Buyers today.
This miracle program allows a Buyer to purchase a home and obtain the monies for repairs or home improvements all rolled into a single loan with a SINGLE monthly FIXED RATE payment. The repairs can cost as little as $5,000 or can run as high as necessary to fully gut-renovate a home.
The limit on the repair monies included in the loan is the Loan-To-Value (LTV) Limit based on statutory FHA Loan Limits in your area (see below). And this LTV percentage is calculated based on the value of the house AFTER improvements.
The 203k program even has a provision allowing the Buyer to request that up to 6 months worth of mortgage payments be included in the loan so they donâ€™t have to pay two monthly housing
expensesâ€”rent and mortgageâ€”while the house is under construction.
203k Interest rates run higher than market, but this is still an ideal program to help Buyers achieve their goals of homeownership while simultaneously updating or renovating a home for the lowest possible cost.
Highlights of the 203k Program:
â€¢Buyer can obtain the cash needed to conduct improvements on a home
â€¢purchase folded into the same mortgage loan needed to purchase the house.
â€¢Borrower must qualify according to regular FHA Underwriting criteria with regards to Income, Assets and Credit.
â€¢The Program is only open to Owner-Occupants; no investors permitted. BUT you do NOT have to be a First-Time Homebuyer.
â€¢No Income Limits; no minimum income requirements. No geographic limitations, with the exception that the property is here in the good olâ€™ USA!
â€¢Purchase + Improvements = ONE Mortgage and ONE Monthly Payment
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker â€“ NYS Dept. of Financial Services
Generally in a short sale, I work on getting a commitment so that by the time the short sale is approved, you're ready to close and avoid having to request extensions, which most times kills your deal. When doing a 203(k) it's even more critical to work on obtaining a commitment while the short sale is being negotiated, just because so many more time consuming issues can arise with a 203(k) loan.
Right after closing, funds for the rehab are disbursed to you and your contractor, who can begin the work. There are so many details involved that your best move is to meet face-to-face with a loan officer who has this loan program available, go over everything step by step, and go from there.
Feel free to contact me with any questions. Good luck!
Senior Loan Officer
Sterling National Bank