An In-Depth Study on 203k Mortgage Acquisition

Jan 04, 2014 Alice Mortgage Comments Off on An In-Depth Study on 203k Mortgage Acquisition

If someone is planning to repair his/her home but is out of cash, shouldn’t there be a way out for someone like you who want to fix up these blemishes and make it a better place to live? The answer is the federal government who has come up with the Federal Housing administration’s loan. This FHA 203 (k) loan is for individuals who wish to repair their damaged home so as to make it proper for living. These loans are completely sanctioned by the government to help the lenders. Before going further, it is very important that one should understand the difference between 203k streamline and full 203k because there are two types of loans.

Difference between a Streamline and Full 203k Mortgage

The 203k streamline is very popular among homebuyers. The maximum amount of repair that can be given under 203k streamline is $35,000 and it do not allow any structural repair to be done to the home except the need of the repair due to an unforeseen circumstance. On the other hand, the amount of repair for the full 203k is more than $35,000.

There are some guidelines prescribed as to which types of repairs come under 203k loans.

Allowable Repairs Include:

Plumbing
Repair of roof and floor
Repair of ventilation and air conditioner
Remodeling of kitchen
Repair of any appliance
Bathroom remodeling
Room additions

Labor cost needs to be included in the amount of loan, even if the homeowners do the repairing and the work of repair should be completed within six months. There are some excellent benefits of these loans and the main benefit is that the loan gives you the facility to purchase a home in need of repairs that you might not otherwise have been able to afford. Secondly, the down payments are also not very high. But as it is said that everything has some limitations also and so it also has some downsides. The biggest disadvantage is that not all the properties come under its list, plus there are limits on the amount of funding as well. Last but not the least, applying for the loan is also not very easy. To apply for the loan, you need to hire a consultancy and there are several reputed consultancies available that can help you in preparing the exhibits that include detailed proposal of the work you want to do and the estimated cost for each work that is required to get the loan. For doing all this work, these consultancies charge some money and that money is included in the amount of loan.

Thus, 203k mortgage acquisition is the only mortgage loan where the sum of the settlement cost is provided by the government. The only thing that is needed to be taken into consideration before giving the loan is whether the particular repairing comes under this loan or not.