A streamlined version of the FHA's 203(k) renovation loan program will allow borrowers to add the cost of repairs to their mortgages.
Under the new version of the program, buyers can roll the cost of minor repairs such as old appliances and leaky windows into their government-insured mortgage, eliminating the need to take out a second mortgage or other debt to pay for the repairs.
FHA has removed many of the requirements of the standard 203(k) program, making the closing, moving and repairs a quicker process.
The program is primarily designed to help fixer-uppers find credit-worthy owners, but the loan can also be used to refinance an existing loan to pay for fixing up the property. The loan amount can not extract any equity from the property.
The streamlining of the 203(k) is a continued effort by HUD to make FHA a relevant mortgage source in the market. The program is also known as the "quick fix" loan and was introduced a year ago to help disperse the difficulty of obtaining an FHA loan due to minor repairs.
The program at first required at least $5,000 of repairs to be made, but no more than $15,000. The minimum has now been removed and the maximum has been raised to $35,000. The list of uncomplicated improvements has also been expanded.
The list now includes the replacement of roofs, gutters, air systems, plumbing, electrical, windows and doors, flooring, septic, wells, decks, patios and porches. A good rule of thumb is that any minor remodeling that does not involve structural repair should qualify. This includes painting, weatherization, new appliances, improvements for the disabled and basement finishing.
Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!
