Home Loans - FHA/HUD 203K Rehabilitation Loans
What Is The FHA-203K Rehabilitation Loan?
The FHA (Federal Housing Administration) 203K Rehabilitation Loan is arguably one of the smartest federal loan programs ever launched, and is a branch of the Housing And Urban Development department. By using an FHA approved lender you may be able to qualify for a 203K rehab loan - which is or long term mortgage, adjustable or fixed, and can be used to upgrade your property. The loan can be spent on anything from simple weather stripping repair and replacement, right up to complete tear-down demolition projects. (you have to have solid foundation to be eligible for a complete demo)
Why Apply For The FHA-203K Rehabilitation Loan?
The reason you want to consider the 203K Rehab loan is because of the interest rate you pay compared to what a private lender or bank will charge you. You need to stay away from interim (short-term), high interest financing. Stay away from any kind of bridge loan or balloon payment financing offered by some of the banks. Usually this is how it plays out if you are unlucky enough to utilize the 203K loan;
- the home-buyer purchases a property or house that needs serious repair, or some basic TLC (tender of loving care), in which they procure financing from a bank
- then the home-owner borrowers money on the short term, paying a hefty interest rate on their money. Sometimes the home-owner will run into unforeseen problems during the revitalization effort, and be stuck with borrowing allot more interim money than they planned on originally (big $$$$ down the toilet….so to speak)
- after all the repairs are complete, and the rehabilitated property is ready for moving into, the home-owner must now finalize a long term mortgage with the bank
As you can see, due to the short term loan (or loans) involved, many Americans would not be in a financial position to afford fixing up what could be a perfectly respectable house or property. The FHA 203K Loan gives possible home-buyers an opportunity to buy a fixer upper house or unit(s), make the very best of it, and not be burdened with various short term loans. The HUD (Housing And Urban Development) department stands firmly behind the 203K, as it is a fantastic way to empower Americans - at the same time beautify urban areas with clean and respectable housing.
Are You Eligible For A 203K Loan?
There are some basic guidelines used by the Federal Housing Administration when approving a 203K loan. First of all, co-op units are not eligible. The number of units allowed is stipulated by the local zoning commission or authorities, and you won’t see the cash unless these folks give you the thumbs up. The house, home, or property must be standing for at least one year in time, and it has to be a family home housing 1-4 occupants.
How To Apply For A 203K Loan
If you want to be approved for a 203K plan housing loan, you simply fill out an application form with a lender that is approved by the Federal Housing Administration. The FHA approved lender will have the property appraised and have your credit rating looked over. If the bank believes the project is viable and long-standing one, they will grant the loan which is insured by HUD.
Why The 203K Rehabilitation Loan Is A Win Win Win
- the banks win because their risk is virtually removed when lending money for quality properties with HUD insurance
- Americans on a whole win because their cities and neighborhoods are being rehabilitated
- low income residents win because they can become home-owners (quality home-owners)
- the government wins because America is being rehabilitated and revitalized
- construction companies win because they receive secure contracts
- construction workers win because they gain employment
- all spin off employees and companies win as well
In Conclusion
As you can see, the overall benefits from the 203K rehabilitation loan go on forever. The department (HUD) rarely has to pay a claim by a bank or lender, as the banks tend to make sure each rehabilitation project is viable in the first place. This program simply loosens bank money and approved loans for millions of Americans who are not in a financial position to leverage personal assets in order to buy a fix up and rundown property.
Contacting The HUD
- Phone: (800) 697-6967 - Can be reached between 8:30 Am to 8:30 Pm, Eastern Standard Time, MON-FRI
- Mail: U.S. Department of Housing and Urban Development, P.O. Box 23699, Washington, DC, 20026-3699
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