Whats a 203K loan?

Asked by Michael, Newport News, VA Tue Jan 6, 2009

Looking for money to rehab our home. Dont have enough equity to pull and even if we did, we have only been in the home for 5 months. Any help in the right direction would be appreciated..

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Dana Lindberg, Both Buyer And Seller, Phoenix, AZ
Sat Sep 21, 2013
203k loan is a government program that enables you to purchase a home and finances certain upgrades and repairs as part of your mortgage. For more details about 203k loan, visit http://www.cfs203k.com. CFS Mortgage and RenovationReady brings together more than 50 years of traditional and renovation lending know-how. Let their team of experts help you.
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Thomas Young, Home Buyer, Phoenix, AZ
Sat May 25, 2013
From my experience with 203k loans, the best advice is to use a lender that offers assistance via third party with 203k processing.
This shortens the closing time by weeks. Try http://www.cfs-mortgage.com/203k for more information.
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Lisa Burrow, Agent, Seattle, WA
Tue Jan 6, 2009
Pete's right, 203K are great for doing improvements, but they are generally done when you purchase and similar to how some new construction are done, payments made when work is done. Normally, you'd be looking at a home equity loan, which is tax deductible. But with no equity, I would imagine it would be hard to do anything at this point, especially right now with the market prices a bit volatile. Unless of course the improvements will add value, you'd be dealing with an appraisal issue with the lender, the home may not appraise out for monies needed to do the improvements. This is a lender question though. You're dilema is one many buyers and want to be buyers are dealing with in this market. I see this questions weekly during showings..can we rehab the house..can we get a loan to do this.

Also, not sure what renovations you want to do, but things that are associated with energy efficiency of the home, might be able to be accomplished through the utility companies. You could check with them to see if they have any programs available for such..you never know. My mother in TN back many years ago had her homes outdated heating/ac system replaced with central heat and air and it was done through the utility company through a monthly payment plan. Check with some of the companies to see if any of the renovations you want to do are tied into the utilities.

Hope you're able to get some answers that will assist you in your needs. Keep in mind, you can't build equity when taking loans out on equity you have....but some improvement can add value to your property. A lot of people utilize yearly tax returns to do improvements as well as put back for a bit..only alternative if loan doesn't hash out at this point. Hopefully you can itemize and count your taxes and interest paid on mortage the last few months to get some returns back..part of the benefit of home ownership...

Another option for ya perhaps..$7,500 first time home buyer tax credit. This is credit that's available to those that have bought this year..defiantely timeframe you bought in. There is criteria to qualify and it's to be paid back through taxes for so many years. I'd look into this as well, might create a pool of money from more tax return. Simple $7,500 first time home buyer tax credit google search will pull. IRS site is key though..

I'd take Pete's offer on hooking up with one of his lenders up in your area to assist you further. They will have more ideas and if not look into some I've listed above and research some.

Congrats on your new home :)

Lisa Burrow
RE/MAX Allegiance
Virginia Beach, VA
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Pete Spadaro, Agent, Williamsburg, VA
Tue Jan 6, 2009

203k loans are great for building the cost of improvements into the mortgage. I have had past clients use this program several times in the past. They were able to buy the house they wanted in the right location and make improvements prior to moving in. It sounds like you want to make some improvements to the home you're in now. I know several local (I'm in Williamsburg, VA) loan officers that can help. Let me know if you need some contact numbers.

- Pete
Web Reference:  http://www.SpadaroHomes.com
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Scott Godzyk, Agent, Manchester, NH
Tue Jan 6, 2009
203k may not be for you, it is a loan used for purchases, it may be used for refi's if you and the home meets the qualifications. Either way you should check with a local and trusted mortgage broker, stay away from the internet lenders. A loan officer will look at your credit and your financials and let you know what programs are available. Most lenders require you to be in your home for a year before refinancing however you may find a newer program that will fit your needs. good luck.
Web Reference:  http://www.ScottSellsNH.com
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