Getting Work Done With A FHA 203K Mortgage Loan
It's true, there's no place like home. But what if you don't have a home? That's the dilemma solved by the Federal Housing Administration (FHA). The FHA is the division of the Department of Housing and Urban Development (HUD) of the United States government that manages several mortgage programs. Among these beneficial programs is the FHA 203K loan program. This program provides home renovations and expands home ownership opportunities as well. A FHA 203K mortgage allocates up to $35,000 for home improvements that means a 3.5% down payment only, which is very beneficial to first-time home buyers.
The FHA 203K mortgage encompasses both home purchases and repairs. Applying for this complex and detailed loan program requires lots of leg work from both the buyer and the loan officer. Here is a trouble-free list of the things to do in a 203K loan application with some tips in finding the right contractor:
Look for the ideal loan officer and lending institution. Not all brokerage will have a skilled loan officer, who can handle particularly a complicated loan program such as the 203K loan. And also, not all brokerage offers FHA loan programs. This type of loan requires a lot of paperwork, so, you will need someone reliable and adept in this field.
Find a house. The 203K loan can be used to FHA 203k remodel and upgrade the house and pay off major home rehabilitation like roofs, mechanical, and the like.
Present the required documents promptly. Documents included are: two years of tax returns, two months of bank statements, two current pay stubs, driver’s license, and social security card.
Go through several bidding procedures for home rehabilitation you wish to have.
Review contractor bids carefully and compare. One of the good qualities of a good contractor is that he knows exactly what he has to do. He has to be able to present a good description of the work needed as well as the breakdown of labor and materials. The work of the contractor is to simply give quotes and get the work done on time. Take note, you can have one or more contractors helping you. Once you find the right contractor/s, ask for at least three recommendations, insurance details, and licenses information. And submit all these data to your loan officer.
As soon as the home improvement pricing is presented and the loan package is complete, an assessment will be organized.
If the lending institution agrees with the amount for the property, closing procedures will begin and is the work, which has to start within 30 days. So, be sure to have everything carefully planned out by your contractor.
The advantage of a FHA 203K mortgage is the home improvement program it provides while keeping savings intact. Home developments can be very costly especially if you are just relying on your savings because you’ll eventually run out. With the 203K loan, its low interest rates allow you acquire fair interest rates on the funds to be borrowed. Also, this loan program lets you qualified for a home purchase unlike other loan programs.