Imagine yourself flipping through the local paper, and you come across the following ad:
“Heck of a Wreck for sale! Wow, what a mess! Needs a roof, new furnace, new pipes in the bathroom and every cosmetic update imaginable! But, it’s on a beautiful lot, is big enough for your family and cheap as could be!”
Whether you are a frustrated renter, a savvy investor or simply need more space, this property may be the right one for you. However, if you don’t have a large down payment and you can only get an FHA loan, you may worry that the purchase AND the renovation will be too expensive. The good news is…if you really want the home, you can apply for an FHA rehab loan, aka the 203K.
Here’s the process: after your offer is accepted, you’ll need to have an inspection done by an FHA certified inspector. He’ll write up what work is required for an FHA loan to be approved along with mid-range estimates for the work that needs doing. Next, you get estimates from licensed contractors, and you present all this to your mortgage broker. Any work that can be done before closing will NOT go on your mortgage. Whatever required work is left over must be done by licensed contractors and presented to your bank. The costs of those repairs WILL be added to your FHA loan. So, don’t be afraid to try!
For more information about the 203K Loan, here’s a link to the HUD website. If you have any questions about the process, just let me know.