Many prospective buyers who want to purchase a home that they can fix up may find themselves out of luck when qualifying for a mortgage. Some lenders refuse to give loans to borrowers for damaged properties until the repairs are made, which can make the task quite challenging without the property funding.
However, the Department of Housing and Urban Development offers an FHA mortgage loan that allows a borrower to finance the purchase of a fixer-upper, as well as the cost of making repairs and improvements. This loan is called the 203(k), and is a great way to finance a home repair purchase.
To start the process of obtaining an FHA-approved 203(k), a borrower must first have a thorough appraisal done that will determine the property’s value after the repairs and submit a detailed proposal that indicates the scale, scope and price of the work that must be completed on the home.
At closing, the seller of the home is often paid the allotted amount, while the repair funds are put into an escrow to pay for renovations as needed.
Freedom Mortgage knows that owning a home is a huge undertaking and you may find yourself getting a little overwhelmed once in a while. Staying current on mortgage loan rates and tips for improving your home value is the best defense against an ever-changing housing market.
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