Want to Roll a New Furnace and Windows into your Mortgage? FHA 203K Loans
It seems that the industry has still not taken hold of this concept and run with it just yet. An FHA 203K loan allows you to purchase a home that is in less than desirable condition and make it your own. And most importantly, without being your own personal ATM with tens of thousands of dollars at your disposal. The “cash-on-hand” you’ll need to complete the transaction is a lot less than you think. Let’s take a quick example of a home you want to purchase for $175,000 and put repairs into worth $25,000. By rolling your closing costs into the sale price, the total out of pocket cash needed at closing will be just 3.5% of the total or $7,000!!! Can you believe that? Here you are a true real estate investor for much less than you ever thought possible. I can just imagine you hosting your own Real Estate Investing infomercial at 2AM in the morning! By the way, I just so happen to have the perfect single family home for you in Brick listed at $175,000 that you could personalize to be your very own (shameless plug). Click the link below to see it!
There are many misconceptions out there preventing the FHA 203K loan from reaching its full potential.
· One for instance is that it has a much higher rate than the typical FHA loan. This is entirely untrue and a bias statement depending on whom you are talking to. One lender may say the FHA 203K Loan (or “K”) is a full 3/8th of a point higher. Another may tell you it’s the same rate, while another may even be lower than your typical FHA loan. Be sure to shop the program around to a few different lenders including mortgage brokers and bankers.
· A second misconception is that the process will be extremely time consuming. Of course this could be true but it also could be completely false. As is the case with any other process in any other industry, it’s paramount to use experts in the field. Also, an FHA 203K consultant is probably worth their weight in gold. There is a consultation fee for the use of the FHA 203K Consultant which is usually based on the cost of repairs and averages about $700. To ensure your closing occurs in 60 days rather than 160 days (or perhaps not at all) in my estimation is worth it.
So if you are interested in buying a pre-foreclosure, short sale or bank-owned property but the cost of repairs to be done after closing has pushed you to the sidelines, then strap on your helmet and get ready to play. Consider the FHA 203K to be your screen play against a blazing pass rush and take it in for the score! (Pardon the football reference but tis the season)
Tom Z