FHA 203k Rehab Loan

The 203k Rehab Loan, subsidized by the FHA (Federal Housing Authority), allows homeowners to integrate the home purchase with the renovation costs under one loan. This loan is also known as a renovation loan as it is known to be used for property refinancing and borrowing money for renovation purposes.

This type of loan is valued because it addresses a typical problem when purchasing a fixer home, and that is not being approved for a loan for a home that needs a big restoration. As lenders can track and verify any repairs done under a 203k loan, the will for loan approval is a lot higher. Of course, for the lender to approve the financing, the related home must have all necessary safety and liability standards, something that is specified by the FHA appraisal.

To make sure you are certain a 203k loan is a right choice for you, it is vital to weigh the pros and cons of this type of loan. To start with the benefits, the 203k load requires a lower down payment and a lower credit score. The interest rates are quite competitive when compared to other similar load types, plus it can provide temporary accommodation while your home is under renovation. And again, let’s not forget the option to combine renovations with the home purchase under one loan.

As already mentioned, some 203k loan cons are present as well. First of all, you are required to have a MIP, or mortgage insurance premium. There is more paperwork, and the overall application takes longer. While you have the option to use the load for renovation purposes, investment properties are out of the picture. And sometimes a HUD consultant must be hired.

When going for a loan, you want to have someone who can take care of you. With Right Key Mortgage, you get exactly that. The goal is to smooth out the process from beginning to end. With free consultations and mortgage services per your needs, Right Key Mortgage makes the process simple and easy to handle.