The Federal Housing Administration, FHA, is the government agency that gives 203k loans to encourage lenders to provide funds for home purchases that appear risky. These loans are designated for homes that may be damaged or those that require to be rehabilitated. They cover not just the property cost but also costs of the expected repairs. When looking to take a 203k loan dc residents have some important details to consider.
The required down payments are low, with eligibility criteria being relatively loose. Those whose homes need improvement are able to refinance using this form of funding. This includes a vast range of repairs, among them room additions, remodeling of bathrooms, roofing, air conditioning and flooring. There are two types of the loans; streamlined and regular. The regular loans are for homes which require structural repairs, with streamlined ones being for those that require non structural repairs. To qualify, homeowners must plan to live in the homes being repaired.
The amount of money provided includes the price of the home and that of the expected repairs. Buyers are required to provide some percentage of the funds provided as down payment. The amount is lower than would be required by conventional loans or other types of FHA loans.
For the application process, there has to be proof of income, assets and one will also be required to provide their credit reports. Home appraisals also have to be provided. A home appraisal includes the expected cost of the home after improvements have been done. Detailed proposals of the work have to be provided too which include cost estimates for every repair. The extra paper work is demanding, which is why most people prefer that it be done by consultants. Fees paid to consultants are included in the loan.
The people that benefit most from the loans are those that cannot afford finished homes but have the will to take on a fixer-upper. It however is worth remembering that most lenders do not offer 203k loans. As a result, it is important to first find one that does so. One should expect to spend a lot of time in preparing documents and completing the bureaucratic process. The high interest rates charged are because of the risks involved to lenders. The lenders have to therefore cushion for such risks.
The home improvements are not able to guarantee that they will increase the value of the home. Caution should be taken not to over invest in homes. One should take care not to pour money into the house that can never be recouped in resale. It may end up being a loss rather than gain as was expected.
Buyers normally use the services of inspectors to find out the current condition of homes as regards safety issues, hazards and termite infestation. The next step is to choose a lender that provides funds and offers architect plans. Two appraisals will need to be prepared, the first for the value of the home prior to improvement and the other for the value after improvements.
The types of repairs that qualify are diverse. There are specific guidelines as to the kinds of repairs that qualify. Costs of labor are included in the loan, irrespective of whether the homeowner performs repairs.
Find a review of the advantages of taking out a 203K loan DC lenders offer and more information about a reputable loan provider at http://www.203khud.com now.
Author: Harriet PorterThis author has published 33 articles so far.