FHA Loans: 203K Explained

Purchasing real estate is one of the biggest decisions a person can make personally and financially. During this time of economic hardship buying a home has become a very difficult task as the American dream of owning your own home has been crippled by the economic crisis. The biggest obstacle to buying a home is the task of financing it. Banks now a-days have become very strict on their lending policies and that has a negative affect on the real-estate market and those trying to get a loan. Fortunately, the FHA is here to answer the call and that is what will be discussed here.
The government has established a program in which they insure a portion of the purchase of your new home and the cost of the work you want to do on the home you’re buying. The biggest advantage of this deal is you only need 3.5 % down and the rehab costs are lumped into the loan which allows you to pay over a 30 year period rather than coming out of pocket for that money. This will save you time and money by allowing you to have only one loan. If you just had a conventional 30- year loan you would have to go out and get a Construction loan that has high interest rates and a short payment period. By using the 203-K loan program you can have the flexibility to improve your house, increase the house’s equity, and save money before you even move in. What can go wrong with that? This loan allows you to purchase a singe family home, a condominium unit, one to four family dwelling that has been completed for at least one year, and a mixed used residential property.
In summary, people are under the impression that you need 20% down and perfect credit to buy a home and that just isn’t the case. Most people are unaware of how FHA loan products work and have never even heard of most of their programs- including the 203K loan. Through education and the efforts of your Realtor and lender, you will find that many of the barriers to home ownership in today’s market can be removed.

Newman Realty

http://www.newmanrealtyillinois.com