FHA Home Loans – Property Condition & 203k Loan Program
More and more homebuyers in the current market are using FHA Home loans for the purchase of their homes.
These types of loan offer lower down payments then conventional home loans and are often the preferred home loan for first time home buyers, which make up a large percentage of the current home buying market.
Not only are down payments lower, but these are government backed loan programs that offer low interest rates and fixed terms. However, it is also very important that in the current marketplace, home buyers are prepared for some of the potential issues that they may run into with an FHA loan.
That is to say that to obtain an FHA home loan there are sometimes different standards that properties are held to. This week will present information on one major potential issue in regard obtaining an FHA home loan and how to get past it.
POTENTIAL PROBLEM – Property Condition
The Federal Housing Administration expects homes to be livable upon purchase. As a result, the agency has a strict inspection requirement intended to catch any potential health or safety hazards.
Potential issues could be things such as a broken window, holes in walls or damage to the flooring. A photo submitted to a bank by the FHA appraiser that appears to show a problem with the home’s condition can trigger a repair and reappraisal delay lasting weeks.
With many resales being foreclosed or short sale properties, there is the potential for some damage in these otherwise quality homes and this must be considered.
The obvious answer is to ask the seller to correct these defects; however, in many cases the seller may be unwilling or unable to do so. That is where you need an alternative plan of action.
SOLUTION: FHA’s 203K Home Loan Program
If a property needs repairs that are somewhat major or the seller is unable or unwilling to work with you, the FHA’s 203K home loan program can be your solution. The 203k home loan program allows homeowners to borrow up to $35,000 for nonstructural repairs to bring the home up to speed before moving in.
Of course there are certain restrictions as to what can and can not be repaired using a 203K home loan. And in addition, the work must be often be completed by a licensed contractor. However, this program provides a solution to one of the key limitations to homeowners looking to obtain an FHA loans for the purchase of their new home. This is just one solution to potential roadblocks for FHA home loans.