Have you ever thought "Wouldn't it be nice to remodel the bathroom?" or "We should update the kitchen" or maybe "I sure would like to add on to the garage"?
Many homeowners talk about improving or upgrading their homes,but do not realize that a bank considers this a construction project. Which brings us to Rehab Loans. These loans fill a special niche between a regular construction loan and a regular mortgage. Designed for smaller projects like room additions or home upgrades, these mortgages incorporate the characteristics of a new construction loan with the convenience of permanent financing.
One of the primary advantages of a Rehab Loan is that the loan is qualified and approved based on the future value of the home. In other words, an appraiser will determine what the house will be worth when all upgrades are completed! The house will be worth more money when it is finished and the new rehab loan is based on that increased value.
FHA's 203(k) Mortgage program is HUD's primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding home ownership opportunities. The 203(k) program will allow repair or installation of items such as
- insulation
- windows
- structural repairs
- remodeling of kitchens or bathrooms
- exterior siding and doors
- repair or replacement of plumbing, heating, air conditioning or electrical systems
- repair or installation of wells and septic systems
- replacement of carpets, flooring or tiling
- energy conservation improvements
- major landscape work or site improvement
- walkways, driveways and decks
FHA's Streamline 203(k) Limited Repair program permits home buyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, home buyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.
