ReHab Loans :
FHA Section 203 (k) insurance enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the costs of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home. This Rehab Program allows borrowers to complete the work on their property after they close on their FHA Mortgage.
FHA STANDARD 203 (k) Program:
Section 203 (k) insures mortgages covering the purchase or refinancing & rehabilitation of a home that is at least one year old. A portion of the loan proceeds is used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account & released as rehabilitation is completed. The cost of the rehab must be at least $5,000, but the total value of the property must still fall within $417,000 maximum allowable FHA mortgage in the State of Illinois.
The value of the property is determined by either (1) the value of the property before rehab plus the cost of the rehab, or (2) 110% of the appraised value of the property after rehab, whichever is less. Some types of improvements this Section 203 (k) financing include:
Properties financed under this program must meet basic energy efficiencies & structural standards.
Homebuyers & homeowners wishing to do limited upgrades to their home involving uncomplicated rehabilitation & improvements without plans, consultants, engineers, & architects may utilize the FHA Streamline 203 (k) Program.
FHA LIMITED 203 (k) Limited Repair Program:
This credit qualifying, no cash out program permits homebuyers and homeowners to finance up to an additional $35,000 into their mortgage to improve their home. The total amount you would be borrowing will include the price of the home, as well as, the estimate of the repairs (including the materials & the labor for the repairs). This version of the 203 (k) loan is meant for homes that are not in need of structural repairs. There is no minimum amount of repairs that need to be made to qualify for a Streamline 203 (k) Program; however the repairs are caped at a maximum of $35,000 towards repairs.
Both versions of the FHA 203 (k) loan program require repairs to begin within 30 DAYS of the loan closing. All repairs on the home must be completed within 5 MONTHS of the closing date. There are specific guidelines from FHA (Federal Housing Administration) about what types of projects can be financed with a 203 (k) loan. Typically the FHA will not finance luxury improvements to a home, such as the addition of a swimming pool, with the 203 (k) mortgage loan products.
FNMA HOME STYLE CONVENTIONAL PROGRAM
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