Mortgage : Home Loans : Refinance : Home Equity Loans

By Lynn Solana

Attempting to buy a house that needs repairs is often a frustrating experience due to the fact that financing is hard to acquire until the repairs are made…and the repairs cannot be done until the house is purchased.

However, there are options.

FHA has developed a new insured mortgage, HUD’s “Streamline 203 (K)”, that is a limited repair program that will allow home purchasers to finance an additional $35,000 into their mortgage for improvements before taking occupancy. Approved lenders nationwide provide the FHA Insured 203 (K) loan to purchase or refinance a property and it is available to persons wanting to occupy the home.

The down payment is approximately 3% of the total mortgage, including repair costs of the property.

If you’ve got your eye on a great fixer-upper and need financing, have an analysis of the property done, with your real estate professional, to determine feasibility. Then have the realtor draw up a sales contract stating that you are applying for a 203 (K) loan and that the contract is contingent on being approved based on additional required repairs by the lender or FHA.

After selecting an FHA-approved 203 (K) lender, arrange for a detailed proposal of the work needed, including an in-depth cost estimate on each improvement.

An appraisal is done based on the property value AFTER renovation.

Once your credit is approved, the loan will close covering the purchase or refinancing cost, the home repair costs and the allowable closing costs. There will also be a reserve of 10% to 20% of the repair costs to cover any extra work not covered in the original proposal.

When the property closes, the seller is paid and any remaining funds are put in an escrow account for the repair costs during the renovation period.

For more information on this type of home improvement financing, contact your local realtor or FHA office.

This article is among hundreds of home improvement and repair tips featured on our website Drywall Finishing !
Tips. >

===========================================
For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
===========================================

This entry was posted on Monday, September 18th, 2006 at 2:34 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.