Rolling purchase price, fix-up costs into 1 loan is next best thing to new construction
--This is the Department of Housing and Urban Development's primary program for the rehabilitation and repair of single-family properties.
--The program operates through FHA-approved lending institutions, which submit applications to have the property appraised and have the buyer's credit approved.
--To purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property.
The best feature of this loan is that it can be rolled into the mortgage.
Robison explains: "The reason people should use this loan is because it is a way to not have to come upfront with cash. You bring the home's value up and roll it into your mortgage. It really opens up what's available on the market because if someone is looking at homes and saying, 'I can't buy this one because it is going to take $30,000 to redo the kitchen and put in a new carpet, they can get the expense wrapped up into one loan with one closing."
There is even a streamline version of this loan that can go up to $35,000. Otherwise, the FHA loan limits vary by market, which, according to one website, range from $271,050 to $729,750.
The same website offers this note about qualifying: minimum down payment of 3.5 percent; credit score of 640 or higher; no other FHA loans; and you do not have to be a first-time buyer.
In 2011, Robison said his company did about 14 projects using the 203(k) loan. "They weren't very popular last year. The FHA only closed about 4,000 of these loans across the country," he said.
And for this year?
"It's just now catching on," he said. "Through the first couple of months in 2012, I've already done four. If I stay on this track, I'll probably do 20 to 25 this year."
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.
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