Are you a homeowner looking for a rehab loan to improve your home? Are you thinking of adding an extra room, upgrading your kitchen or bathroom? Or maybe you just need to tend to a few upgrades or make some much needed repairs to your older home. Do you have little equity due to the market conditions or because you just recently purchased? If you answered YES to any of the above then you might want to consider financing your rehab project with the FHA 203k loan.
The FHA 203k rehab loan will help you finance your rehab project from minor repair work to turning your current residence into the home you’ve always dreamed about.
FHA 203K Rehab Loan vs. Conventional Cash Out & Home Equity Loans?
Most rehab loans are usually designed for investors. These loans have much higher interest rates and shorter terms. Standard Conventional (cash out) loans and Home Equity Loans are limited to the amount you can borrow and allow homeowners only to borrow up to 75% of the property value. Which these days, with values dropping homeowners may find themselves short in equity.
In comparison, the FHA 203k rehab loan is designed for a higher loan to value and can even exceed the property’s future value which means very little equity is needed. Along with that the 203k rehab loan is determined by the future value after repairs have been made instead of the property’s current value. It takes into consideration what the new value will be with the money you will be using for the rehab.
Is the FHA 203K Rehab Loan for me?
If you have enough equity in your property where you can take out enough money for your rehab at or below 80 % of what your property is currently worth then an FHA 203k probably isn’t your best option.
But … if you have recently purchased your home or have very little equity then this loan may be just what you’re looking for! As it will pay off your current mortgage as well as lend you the extra cash needed to upgrade, remodel and repair your home – All in one loan!
So homeowners don’t delay anymore! You now have an option. You can finance your rehab project even with little equity. The FHA 203K rehab loan is a reliable way to finance and a great option unlike any other. Turn your current residence into the home it can be and start enjoying your new found gem with your family and friends.