In the world of loans and mortgages of today's roller-coaster economic playground, it is easy for the non-detail oriented person to get lost in the sea of terms and numbers floating around that are ambiguous to say the least. A person might not understand all the language that they must sift through with a magnifying glass in one hand and a dictionary in the other that there are some ways to easily get an FHA loan. If you’re looking at purchasing a fixer upper or making some major repairs to your current home then you might want to consider looking into the FHA 203k loan program.
Simply put, an FHA 203(k) loan program allows the borrower to add necessary repairs needed to the house they are purchasing to the total loan amount of the mortgage applied for. The only contingency is that the property must appraise for that much after the necessary repairs have been completed.
Of course as with all FHA loans, the FHA purchase loan 203k process still requires credit and income qualifying. There is no reason to even apply if you do not have your credit in order. If you have defaulted on a government loan or any government sponsored loan, then you will not qualify for the loan. The property will also have to be qualified.
However if your credit is in good standing, the FHA 202k purchase loan should be considered as a great option. If you are in low to moderate income bracket or if you have limited amount of money as down payment, then this loan is probably your best option. It is easier and less time consuming than having to go through different private entities to secure the funds you might need to start the repairs on your fixer-upper home, or remodel.
The difference between the FHA203k and other more traditional loans is that normally a lender will only want to secure the loan AFTER the property value is secured. The lender wants to know the EXACT value of the property being bought BEFORE they guarantee a loan. When a borrower wants to buy a fixer-upper, or wants to do major remodeling on an existing home, it is hard to estimate what the value of the property “will be”. This makes lending money from the lenders point of view much less attractive and it then becomes a higher risk. They get out their 10 foot pole and start backing up from the loan when they can't get an accurate account of the property value. This is what makes the FHA 203k loan more efficient when a borrower is interested in buying a...