I know most of you haven’t come across this 203k rehab loan. It can also be called a Rehab Loan or FHA construction loan. 203k loan is a type of loan that allows you to finance two major items, which are the house itself and the needed or wanted repairs.
Budget sometimes can be a problem but this program is good for people on a tighter budget. It is also good for those who want to buy an older or run-down home that needs repair. This means that the 203k loan does not allow buyers to purchase homes that require renovations.
What is 203k Mortgage All About?
FHA 203k loan in Florida is entirely different from most traditional mortgage loans. Since lenders will not pay for home renovations in addition to purchase. Buyers will need to first pay cash for repairs or take out an additional loan.
This situation is quite difficult for buyers who want to buy a home and complete some repairs. But what the 203k loan offers is an alternative means of financing fixer-uppers. For primary homebuyers looking for fixer-uppers, a rehab loan can be a great option.
203k Loan Benefits
The benefits of a 203k loan are not what you should miss out on. One of the benefits is that it gives home buyers instant equity. Homes in need of repair can be made cheaper and the fixes may not be very expensive at all.
It is possible to have lower monthly payments and higher equity in your home the very moment you move in. 203k loan is worth the extra effort because you get to buy a home at a discount.
203k Loan Requirements
You might be wondering what the requirements are when applying for 203k loan lenders. Well, you don’t need to worry. The above list will be able to guide you.
- Credit score: For you to qualify for this program, your minimum credit score should be up to 620. During the loan process, you need to maintain your credit score. It is very important to do so.
- Down payments: Normally, this loan has a low down payment requirement. This means that if your credit score is good, you have a high chance of qualifying for a 3.5% down payment for your 203k loan.
Also, you need to know that the more money an individual put down, the good and the better the terms will be.
How To Apply for 203k Loan Online
Are you looking to apply for this program, and then you have come to the right place. When applying for this program you need to know that there are steps required to make it happen.
The application guidelines are as follows:
- First of all, you will need to speak to any licensed lending officers.
- Then, you have to work with real estate to locate an eligible property.
- Submit an offer of your asset or property
- After that obtain an inspection and estimates from reputable contractors.
- Select a contractor and agree on your estimate.
- Order an appraisal on your desired property.
- Always stay in contact with your lender and contractor to ensure all agreements are met on time.
- After that is done, you can now move into your dream home.
You should know that depending on the home that you buy and the renovations you completed. You could have a significant amount of equity in your home after you move in. I hope this article was helpful.