Buy a Fixer “Upper” With an FHA Loan
If you want to know how much your house will sell for in South Florida, Broward County go to Home Value or call Irene Medina.Realtor at 954-439-4851.
Many real estate professionals possess stories of clients who simply can’t appear to look over a home’s minor imperfections, whether they are ratty floors or sagging screens. Then, there are actually those clients who’s ablility to visualize the chances of a property that’s seemingly simply being held up by a prayer.
If you fall into the aforementioned category but are short on funds, here’s a remedy: a government-backed loan that covers not just the purchase price of the home, but the price to rehab it as well. It’s a mortgage offered by the Department of Housing and Urban Development, known as the Section 203(k) Program.
The Possibilities
The 203(k) loan is best known for allowing the borrower to rehab and repair a home. But it has some other uses as well. Borrowers have tried the loan to:
Change single-family homes into multifamily dwellings, with up to four units.
Change multi-units into a single-family home.
Move a house to purchased land.
If you’ve found a house that needs just a bit of work instead of an entire rehab, HUD has a 203(k) streamlined program. This program includes enhancements, upgrades or repairs with expenses that do not exceed $35,000.
A few of these enhancements may include a kitchen remodel, interior paint and new carpeting – ideal for the potential customer wanting to spiff up a property before placing it in the marketplace or perhaps the purchaser who would like to make her new house move-in ready.
The Home
With many government financing, not only should the buyer meet the requirements, but also the home. A dwelling’s eligibility for the 203(k) program includes:
It must be at least one year old.
If the home is likely to be demolished, the existing foundation must remain.
If the program is being used to rehab a condo, you need to prefer to live in it, and all work must be restricted to the interior of the unit.
The Purchaser
Qualifying for the 203(k) loan is similar to the specifications for a Federal Housing Administration loan. The borrower must:
Show a steady employment background, ideally with precisely the same company for at least the past two years.
Be a lawful citizen of the U.S. and have a Social Security number.
Plan to occupy the property.
Be able to present that your mortgage payment, taxes, insurance and mortgage insurance will be less than 31 percent of revenues.
Be able to present that the mortgage and all other monthly financial obligation add up to not more than 43 percent of revenues.
Be at least two years out of personal bankruptcy, three years out of property foreclosure, and possess re-established good credit rating. There are exceptions to such guidelines, so speak with an FHA-approved loan provider for additional information.
Have a minimum credit rating of 580 to qualify for a 3.5 percent down payment. Borrowers with scores between 500 and 579 may be considered with 10 percent down.
Remember that these are HUD’s specifications and loan providers’ specifications may be tighter. For example,most lenders demand a credit score of 620 or above, although there are rumors in the lending industry that this might increase.
How the 203(k) Loan Works
The good thing about the 203(k) loan program would be that the borrower has only one mortgage that contains both the price of the property and the purchase price to rehabilitate it. The loan amount is based on what the property’s projected worth will be after the work is done.
The information of the way the program works are detailed and could be somewhat confusing to housebuyers who lack home construction experience. The process begins with the lending company, and you will need to use one which is FHA-approved. Ask your real estate agent for a recommendation, or you can find a list of these lenders at HUD’s website.
Your loan provider will likely then select an FHA-approved consultant, whose job it is to figure out the scope of work required. Once that determination is made, the appraiser will figure out what the property will be worth after the job is completed. Payments from escrow will occur at a number of guidelines during construction.
You will have six months to complete the rehabilitation.
With property inventory tight in numerous areas all over the country, widening your home search to incorporate fixers may just allow you to rehab your way to the home you’ve always dreamed of. So, it’s perfectly okay; fall for the chances. You are able to afford to buy a fixer.
Irene Medina and The Medina Real Estate Group have vast experience in marketing of properties extensively worldwide via the internet. They sell their listings in record time and for top dollar and sometimes for above market and appraised value. They have received many recommendations from their extremely satisfied clients and customers. Irene Medina has been a Floridian for the past 22 years and has been a Broward County resident for 21 years. Irene and The Medina Group service, Plantation, Fort Lauderdale, Coral Springs, Parkland, Davie, Weston, Tamarac, Broward County and South Palm Beach. She has been a Silver medal winner with Keller Williams for the past 3 years. She is a Certified Residential Specialist, CRS, Certified Distressed Property Expert, CDPE, she is also a Graduate of the Realtor Institute, GRI. She also holds the following designations, SFR, CHS, TRC and is working on her Commercial RE accreditation.
Irene and The Medina Real Estate Group will “Stand by YOU Every Step of the Way!” from start to finish.
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Irene Medina / Realtor The Medina Real Estate Group |
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