One of the more common questions many FHA 203k lenders get is:
How are FHA 203k loans different from regular FHA loans?
FHA 203k Loans vs. FHA Loans
When you think of getting a mortgage, most people don’t even think that almost all mortgage programs provide only “permanent” financing — meaning, a lender won’t even offer financing unless the property is ready to be financed as-is.
In the event that a home needs repairs, many lenders will require that the repairs are done prior to the financing being finalized.
And with the number of REO properties on the market that are in need of repair, it isn’t hard to see how a “regular” FHA loan that requires the home be move-in-ready could cause a problem if this was the only option available for getting a mortgage.
In the current environment, with so many bank owned homes on the market – one of the most popular loan options is the FHA 203k loan because it allows the homeowner to finance the property and the cost of repairs that need to be made.
FHA 203k Loans: Advantages To FHA 203k Loans
Buying a house that needs repairs? There is no contest really – you can either get your checkbook out and write checks for the repairs prior to the property actually being yours – or you can finance it with an FHA 203k loan. When a property is in need of repair or improvements, then the FHA 203k streamline loan option is really the only option in town when it comes to getting a FHA loan.
FHA 203k Loans: Appraisals Are Important
When getting a FHA 203k loan, the appraised value will be based on after repair value and includes an escrow account to complete the repairs needed to bring the house to a condition that lenders prefer. This means that even if the house needs major repairs, the FHA 203k appraisal will be based on the after-repaired value of the property.
Wondering how to get the best deal on a house in today’s home buying market? The FHA 203k streamline program can allow you to buy a house, fix it up and have immediate equity in your house.
No wonder it is popular!
Have more questions about the FHA 203k program? Be sure to contact our FHA 203k experts.