Why You Should Consider Applying for a Streamlined FHA 203k Loan

Have you been passing up the chance to purchase homes that need repairs simply because you don’t have the funds to renovate them? According to Primary Residential Mortgage, Inc., FHA just might have a solution for your dilemma—the streamlined FHA 203k Loan Program, a streamlined version of the 203k program.

How Exactly Does the FHA Streamlined 203k Loan Program Work?

Before, whenever a borrower buys a home and then applies for a renovation or rehab loan, typically a home equity loan, so that the borrower could renovate the home, he or she would’ve had to apply for two loans—one for purchasing the home and one for renovations. However, some lenders don’t offer renovation loans, while some don’t fund home equity at closing, most especially if there’s no home equity. That said, here’s why you should consider the streamlined 203k program:

• It’s figured into your original balance, which results in only one loan.
• You could opt for a fixed rate or adjustable rate mortgage.
• Your balance could exceed your property’s purchase price.
• Your home inspector appraiser could list down recommended improvements and repairs.
• The FHA doesn’t have a list of approved contractors. This means that you don’t necessarily have to employ professional consultants, architects or engineers, provided that they’re insured and experienced for the exact type of job they’re supposed to complete.
• The program allows for repairs they consider “simple,” meaning easily completed and estimated. Plenty are considered light aesthetic repairs, however, some will need licensed workers to meet neighborhood or state requirements.

Other Crucial Things to Know

The FHA does not allow major renovation, yard or landscaping work, structural damage renovations, add-ons or additional rooms to your home, as well as moving load-bearing walls. It’s likewise vital to note that you should consider applying for a loan not higher than $15,000 because your lender won’t have to inspect the completed renovation and authorize any third parties to inspect the finished project. Additionally, copies of receipts from contractors or a simple letter for you will be enough proof as a completion notice, considering that your lender doesn’t have reason to believe that a third party inspection is needed.