Home buyers don’t always want to take out an FHA guaranteed loan to purchase a brand new home. There are plenty of bargains to be had by purchasing "fixer-upper" properties, and you can save thousands of dollars on the purchase price of a home that has fallen into disrepair, been through foreclosure, government seizure, or a property sold in a non-traditional way like an auction.
A program known as HUD 203(k) lets qualified buyers purchase fixer-uppers with FHA guaranteed loans, and even has built-in protection for the borrower should the repair and renovation process cost more than expected.
Once you pass the usual credit check and you get approval for your FHA mortgage, you proceed to closing with a loan that not only covers the cost of buying the property, but also for remodeling expenses and closing costs allowed by the terms of your FHA home loan.
What's the best part of these “fixer upper” loans? The approved FHA loan amount also includes a percentage of the total remodeling costs (as spelled out in your submitted plan) set aside just in case there is extra work needed. If you didn’t foresee some additional expense or one kind of repairs lead to an additional requirement, you’re covered with that extra money.
When you’re ready to close the deal, the FHA loan money isn’t paid out all at once. The costs of the purchase are covered, but the remaining funds from your new FHA guaranteed loan are deposited into an escrow account and can be used to pay for the work done as you rehab or remodel the property. Because the home must be repaired, the borrower is required to submit a detailed list of repairs and cost estimates with the application. That means putting in some extra research time prior to the FHA loan approval process. With the purchase of a new home with an FHA loan, the property appraiser does much of the work in determining how much the home is worth. In the case of a HUD 203(k), you need to have the property examined, labor and repair costs estimated, and have the repair list broken down so that your lender and the FHA can see how you plan to proceed once the sale is final. Loans are deposited into an escrow account and can be used to pay for the work done as you rehab or remodel the property.
A 203(k) has the same kind of application and approval process as other FHA home loans. You need to locate an FHA-approved lender and fill out the paperwork. The usual credit check and debt-to-income ratio considerations apply, and the low FHA mortgage down payment is also part of the deal. But with an FHA loan for a HUD 203(k), there are some additional requirements.
There are many North Carolina Mountain Properties for sale now that may need repairs to bring them back to that beautiful piece of property they once were. Many buyers think that if they manage to get a loan to buy the property… how would they ever make the repairs needed. A1 Mountain Realty wants to provide you with information that could help with those kinds purchases. This HUD 203(K) loan can do exactly that. There is help out there and A1 Mountain Realty will provide you with information for every aspect of buying that Western North Carolina Real Estate you desire. The agents here will be glad to assist you and will be beside you through every aspect from finding your NC Mountain Home to the final closing day. Give A1 a call today at 336-846-4900 and let us help you. Take a look at all of properties on our website (www.a1mountainrealty.com) and while on our site view picturesque West Jefferson NC and Mt. Jefferson by clicking on the Downtown West Jefferson Webcam tab.
Information gathered from HUD.gov - US Department of Housing and Urban Development
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