You can Get a Loan for a Fixer Upper
The disadvantages of buying fixer-uppers are obvious: they take time and money to make them livable. The advantages, while not as obvious, may just outweigh the disadvantages for certain buyers or in certain types of markets.
With a fixer you may just be able to create the home of your dreams instead of settling for a floor plan or flow that doesn’t really work for you.
Plus, if you play your cards right, you can get an amazing loan that will wrap the cost of the rehab work into the mortgage. You’ll get more house for the money and it will be customized to your tastes and lifestyle.
Loans for Fixers
One of the easiest ways to pay for the rehab of a fixer is with FHA’s 203(k) program. This loan is provided by the U.S. Department of Housing and Urban Development (HUD).
It’s basically an FHA-backed loan that allows for both the cost of the home plus the amount needed to rehab it – all rolled into one monthly payment.
One of the biggest advantages to the FHA 203(k) program is that you won’t be required to make your first mortgage payment until you are actually living in the home.
For a dwelling to qualify for the 203(k) program it must:
The qualifications for the 203(k) loan program for the borrower are identical to those of the standard FHA-backed loan. The borrower must:
The aforementioned requirements are HUD’s – the lender may have more stringent standards. In fact, many lenders won’t approve an applicant who has a credit score lower than 620.
You must also use an FHA-approved lender. HUD has a list of them on its website.
As a side note, never is a home inspection more important than when purchasing a home that needs work. While much of the necessary repairs are easy to see, there may be even more damage that isn’t apparent. Never waive the home inspection.
Blog Archive2016-09-16 16:23:17
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