Every new homeowner deserves to have the home they’ve always wanted. Every new homeowner also deserves to know the options they have when it comes to renovating their new home. That is where the 203k loan comes in.
The 203k loan is a specialized loan that provides home buyers with the opportunity to buy and fix up a property. The home buyer can purchase a property and include the cost of repairs or updates all into one loan payment. The amount borrowed is based upon price of the home and estimated price of repairs, including materials and labor.
There are two types of 203k loans; streamline and standard.
Streamline 203k loans allow homebuyers to finance up to an additional $35,000 into their home mortgage to improve or upgrade their home before they move-in or refinance that amount to update their current home. This loan is usually recommended for smaller household projects that are more cosmetic than structural.
-Replace/add decks, patios, porches
-Minor remolding (kitchen/bath)
Standard 203k covers more complex renovations that exceed $35,000. The loan is designed to assist borrowers with structural work such as additional rooms or wall removal. Up to six months of the payments can be financed into the loan for an alternate residence while the home is being renovated.
Improvements include all Streamline options plus:
-Flooring, tiling and carpeting
Both loan programs require renovations to start within 30 days of closing and to be completed within six months. The application process is similar to the one required for regular mortgage loans so it is important to make sure your credit score is where it needs to be. Also securing any additional financial documents that are ready to be submitted to your lender.
The 203k loan is a great way for homebuyers to turn their dream home into a reality. NOIC Home Mortgage Lender can match you with a licensed mortgage professional that will be able to assist in this process. Visit http://www.noic.com/ to get started.