Section 203(k) from the Federal Housing Administration (FHA) enables buyers to obtain financing for both the house sales price, necessary repairs, and rehabilitation costs in one loan. Rather than going through the complex process of purchasing the house, and then securing another form of financing for modernization or repairs, the FHA 203k program has both combined into a one, long-term, fixed rate covering both the rehabilitation and acquisition costs.
The idea of being able to buy a dilapidated, rundown house and then fix it up is an appealing concept to many people. So many individuals are fascinated with fixing or improving homes, including being able to flip homes for money. Flip or Flop and other television shows, glamorize all of the challenge and hard work that are faced when trying to upgrade a house.
It can be a good idea to think about potentially renovating a house; however, the truth is that it isn’t an easy and quick job that can generate a substantial profit in a short amount of time. Numerous elements should be taken into account when determining which house to buy, like the current state of the local real estate market along with the affordability and extent of the improvements that need to be made.
The following is some relevant information on the 203(k) loan:
You must go through a provider registered with the FHA to apply for an FHA 203(k) mortgage.
After you have had your loan for six or more months, you will be able to refinance the loan and get a conventional home mortgage to replace it.
Usually, you will have six months maximum to get your renovations completed from that time that your loan is approved. However, you may be able to apply to obtain a deadline extension.
Prodigy Lending is a DBA of AmCap Mortgage, Ltd. (NMLS ID# 129122 – www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/129122), an Equal Housing Lender.
Managing RMLO: Jason Turner (NMLS #286357)