How Does a FHA 203(k) Rehab Loan Work?
Colloquially called rehab loans, FHA 203(k) loans are the most common type of home improvement loan used for purchasing a property in need of work. If you are looking for a fixer-upper to save money, a rehab loan might be a great option for you. They can help you afford buying a house in a neighborhood that you otherwise may not be able to afford. Read on to learn about the pros and cons of a rehab loan, and, if you’d like to apply for a rehab loan in Miami, get in touch with Point Mortgage today!
Roll the Costs of the Renovation Into Your Loan
One of the biggest positives of getting a rehab loan is that you may be able to garner significant returns on your investment in the long-run, through value increases with repairs and upgrades. Beyond that, qualifying for a rehab loan is a bit less stringent in terms of credit history, loan limits, and debt-to-income (DTI) ratios. While the FHA doesn’t actually provide you with direct funding (we do that), they do insure the loan, helping you get the great down payment rate of just 3.5% required.
Is a Rehab Loan Right for You?
A rehab loan isn’t right for everyone. For example, 203(k) mortgages have limits on the number of units in the home you may purchase (maximum of four). Only certain upgrades are also approved by a rehab loan — and they must be itemized and outlined prior to approval, which can be a bit of a commitment. Lastly, while rehab loans are great for fixer-upper houses, if you are looking to move in somewhere without having to make major changes, you may be better off with other loan options.
If you want to get a rehab loan, it all starts by reaching out to Point Mortgage of Miami and applying. While rehab loans come with some challenges, they can be perfect for some people. A cost-benefit analysis is the best way to determine if a fixer-upper is worth your while. Want help from a professional mortgage lender?!