24 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 7 Number 17 www . LynchburgRealEstateBrowser . com
FHA ’ s 203K Renovation Loan : Helping You to Make Your Dreams Come True
By Sherry Brady , NMLS 217258 , Branch Manager , Summit Mortgage Corporation
Have you been house hunting for a while ? Looking around , trying to find your dream home , but time after time you leave the house saying “ if only it had “ blank ”, this house would be exactly what we ’ ve been looking for !” You could fill in that blank with any number of things : an updated kitchen , updated bathrooms , hardwood floors , new windows or heat pump – just to name a few . Each house you look at seems to be missing something . Maybe the kitchen and bathrooms have been updated , but it still has old carpet throughout and needs a new roof .
You ’ ve probably heard that it ’ s just not possible to find a home that will check off every single item on your wish list , and that if you find a home that has even 70 % of all the things you want , you should buy it ! In my experience , if you ’ re trying to find a house that ’ s already built and has exactly everything you need , and everything to your taste , you will probably be looking for years , and you still may not find it .
You may have already decided that you ’ re willing to buy the home that needs some updating , or needs a little “ TLC ”, but you ’ re worried that you won ’ t have the funds to make those improvements after you buy the home . You are fairly justified in those concerns . You know what they say about the best laid plans ! I know several people – yours truly included – who have bought a home thinking “ the first thing we ’ re going to do is finish off the basement for the kids ”, and then 10 years later , when the kids are leaving for college , the basement still isn ’ t finished off ! Here ’ s the good news : there ’ s a loan for that !
FHA offers a renovation loan called a 203K loan , and this loan can be used in conjunction with a purchase or a refinance to make needed ( or wanted ) updates or repairs . This loan allows you to buy a home that is exactly where you wanted , but perhaps not exactly what you wanted . The way it works is that you negotiate the purchase price of the home , as is . Then you get a contractors quote for the work you want to have done . The lender puts those two numbers together to come up with your total acquisition cost . The repairs can be small and cosmetic , all the way to major structural changes or additions . There are two versions of the loan depending on how small or large your project is .
Like any other FHA loan , your required down payment is just 3 ½ % of that total cost and your loan is closed like any other home purchase . After closing , the work is completed , your home is inspected and your contractor is paid , and now you have exactly the home you ’ ve always wanted . With FHA ’ s 203K renovation loan , it really IS possible to have your cake and eat it too ! If you ’ re interested in talking about a renovation loan , or seeing what other loans might meet your needs for your new home purchase , feel free to call us or your lender today and get the process started !