Question:

Why take the FHA 203k rehab loan?

Answer:

The FHA 203k rehab loan is a very convenient alternative to taking a separate mortgage to obtain property in need of rehabilitation. Usually, with conventional loans borrowers are required to get a mortgage loan to acquire the property, then perhaps a construction loan to do the repair, and finally refinance those two loans into a single fixed or adjustable rate mortgage loan. The FHA 203k rehab loan saves this hassle allowing the borrower to get a loan to purchase and rehab the desired property as they wish.

Properties Eligible for the FHA 203k Rehab Loan

  • The properties that are eligible should be one to four unit properties that have been completed for at least a year.
  • At least a part of the foundation system has to remain in place if the property in question is to be demolished.
  • Under the FHA 203k rehab loan, single unit properties can be converted into multi-unit properties, and vice versa. Only one-to-four unit properties are considered in both cases.
  • Mixed-use properties are also eligible under the FHA 203k rehab loan within limits. That is, residential properties can have limited commercial exposure floor area and the rehabilitation funds to be extended under the FHA 203k rehab loan will apply to the residential parts of the property. The FHA 203k mortgage should not be used for commercial purposes affecting the health and safety of the building residents.

Final piece of advice: Monitor your credit report and score regularly, to ensure there are no inaccuracies or unauthorized activity. Your credit report and score are the two major methods that creditors and lenders use to make a credit decision about you. Higher scores usually mean lower interest rates, which will save you money.

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Common misspellings: mortage and morgage