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Mortgage Loans Chattanooga Tennessee Greg Petree (Branch Manager) Kathy Cotsakis (Senior Loan Officer) Deeanna Jeffreys (Loan Officer)

 

FHA 203K Home Improvement Loans

What is an FHA 203k?

An FHA 203k loan is one of the more popular and easier to qualify renovation loans on the market right now. It is a loan backed by the federal government and intended to allow people to purchase and renovate a home with one loan. This is how it works: Let’s say you have found a great home at a great price but the kitchen is dated and you would like to add a nice sunroom in the back. An FHA 203k lender would then give you the money to buy (or refinance) the house plus the money to do the necessary renovations to the kitchen and the addition of the sunroom. Upon closing of the loan the cost of the repairs and usually an extra 20% known as a “contingency reserve” are put into an interest bearing escrow where the funds will be dispersed to pay for the improvements upon the home. You can also include up to six months of the mortgage payments in this escrow so that you can live someplace else while the repairs are going on and still pay the mortgage.

What all can I do with an FHA 203k?

That depends on which FHA loan you choose. There are two main types; the full 203k loan which is typically for larger projects with structural damage and the streamlined 203k which is generally for cosmetic, non-structural repairs like installing new appliances or cabinets. There are a number of other things a 203k can do though these include but are not limited to: kitchen/bathroom remodels, flooring, plumbing, siding, a new roof, patios, and decks. You can even tear down a home and build on top of the existing foundation or move a home to another location. What can’t be included in a 203k are so called luxury items. These include things like putting in a pool/hot tub or installing a basketball court.

How much money can I get for repairs with a 203k?

With a full 203k it either the value of the property plus the cost of repairs or up to 110% of the estimated value of the property once the repairs are completed whichever is less. With the streamlined 203k you can get a loan for the purchase price of the home and up to 35,000 dollars.

What types of homes are 203k eligible?

Typically a 1-4 family dwelling that has been completed for at least a year. The 203k also covers some condos and mixed use properties as long as they meet certain criteria.

Why 203k?

There are many benefits of the 203k. One is that it allows a person to buy a house and turn it into their dream home, often for much less than  what they would have paid for it had it come with everything they wanted. This usually means that person gets instant equity. Say a person buys a house for 75,000 and puts 40,000 renovations and after the repairs are completed it is appraised for 135,000. That is 20,000 dollars in instant equity! In addition to this the rates are very competitive with other loan products and since this is an FHA loan a borrower is only required to put down 3.5% instead of the usual 5% most conventional loans require.

Have more questions? Contact your Loan Simple loan officer or mortgage consultant.

HomePath Mortgage

HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed. read more

FHA Loans vs Conventional Loans

Here we will sum up the two most common loan types out there: conventional loans and FHA loans. Let’s get right to it! read more

USDA Rural Development Mortgage

With the USDA Rural Development option, you can borrow 100% of the appraised value. This means you don’t need to come up with the down payment. In fact, you can actually borrow 2% more than the appraised value, and use the extra to make some light repairs or home improvements. The main requirement for a USDA Rural Development mortgage is that the property must fall within certain geographical areas, outside the city limits of major metropolitan centers. read more

FHA Renovation Loan

What is an FHA 203k?

An FHA 203k loan is one of the more popular and easier to qualify renovation loans on the market right now. It is a loan backed by the federal government and intended to allow people to purchase and renovate a home with one loan. This is how it works: read more

HomePath Renovation Mortgage

Homepath Renovation Mortgage is a mortgage product that allows the borrower to make light to moderate repairs on a Fannie Mae-owned property and roll the costs of the renovations into the mortgage. read more

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A reverse mortgage is a special loan for senior citizens that allows them to convert a portion of their home equity into cash. Unlike a traditional mortgage or home equity line, borrowers are not required to make a house payment after borrowing the money as long as they use the home as their primary residence. A Reverse Mortgage can also be used for the purchase of a new home! Ask one of our loan officers for details on that. read more

Loan Simple
NMLS# 3032
8052 Standifer Gap, Suite A, Chattanooga, TN 37421
Branch NMLS# 386455

Equal Housing Lender

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