Mortgage Update: 203K Renovation Program Available
I had some interest last week in the 203K FHA renovation loan which comes into play on purchases of homes that need repair work , such as foreclosures. Since it is an FHA loan, the price range cannot exceed approximately $260,000 in metro Atlanta, but there are plenty of homes that meet that criteria. And there is a good possibility that FHA will increase its loan limits very soon to match conventional loans at $417,000.
Basically the 203K program works like this. The borrower gets bids from contractors on the work that needs to be done to the home. Cosmetic items such as kitchen appliances can even be included, for example. We then take the sales price and the proposed repair amount and base the loan on that figure. The borrower would then close and an escrow account would be set up for the repair items. Typically the work would be completed in 90 days. Once the work is completed, we would send the appraiser back out for a final inspection and the money would be disbursed.
The rate on this program is typically about 1% higher than the traditional FHA loan program. There is no minimum credit score to qualify as the 203K is basically an FHA loan.
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