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Rehab mortgages are perfect for homes that need some work before they can be occupied. This FHA loan program may be right for you! …
By Deanna Parrish, The Ukiah Daily Journal, Feb. 5, 2012
You find this great house that is in the perfect location, it’s in a great school district, excellent floor plan and the yard you always wanted. It’s the lowest price in the neighborhood. So what’s not to like? It’s a foreclosure. And, the last occupant ripped up the carpet, punched holes in the walls, broke windows, they even took a toilet with them! Can you imagine fixing all of that? Most first-time home buyers turn around and walk out the door because they believe they couldn’t possibly come up with the money to fix all of this.
Most mortgage loan programs require homes “in need of work” to be complete before the financing can be secured for the purchase transaction. Whether the property needs a little or a lot of work, most first-time home buyers simply don’t have the up-front cash to invest in a property prior to actually securing the financing.
However, the FHA 203(k) Rehab Loan may be your answer to turning that “fixer-upper” into your dream home. The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), offers this loan program to provide for the rehabilitation and repair of single family properties. One single loan is used to pay for the purchase (or refinance) and the cost of rehabilitation or updating of the home. This loan is only available for homebuyers purchasing a primary residence that they will occupy. Unfortunately, it is not a program for investors to purchase a home, fix it up and then sell.
Another great thing about this loan program is that it is originated and underwritten just like a standard FHA loan program. You can purchase the home with the same 3.5 percent down payment of a regular FHA loan and the seller can still assist with your closing costs.
Read the rest of this article, including info about the two types of 203K loans, at The Ukiah Daily Journal.
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