When financing either a FHA 203k renovation purchase or refinance transaction borrowers must keep in mind that the interest rate on the FHA 203k renovation loan is typically a .5% higher than the standard FHA 203b loan. If a borrower obtains an initial loan approval based on a standard FHA loan program and subsequently decides to pursue a renovation loan the added borrowing cost of the FHA 203k loan may impact the preliminary loan approval.
FHA 203k loan is not just for purchase transactions. Homeowners can consolidate their existing mortgage loan(s) and the cost of the home renovation project into one new loan up to 97.75% of the "after-completed" value of the house. The "after-completed" value of the house is the anticipated value of the house that takes into consideration all of the improvements that will be made to the house through the FHA 203k refinance loan renovation project.
The Webs First FHA 203k Loan Calculator – Determine Loan Amount, Rehab Escrow Account, Mortgage Payment, and 203k Type
Understanding the parameters of the FHA 203k Loan calculation is difficult not only for Loan Officers who have yet to process a FHA 203k Loan, experienced Realtors, and even educated home buyers.
Demanding or Practical: Listing Agents Asking For FHA 203k Loan Offers Only
Search any regional Multiple Listing Service using the keyword "203k" or "FHA 203k Loan" and you will find scores of homes listed for sale that need work. Listing Agents now recognize the benefits to disclosing a properties condition that may result in less showings but an overall higher quality prospect since proper buyer expectations are established upfront.
Kiddie Condo Program and the FHA 203k Loan Program
One of the least none but hugely positive attributes of the FHA 203k Loan is that the loan permits for the use of non-occupant cosigners. This means an eligible credit qualifying home buyer who lacks the ability to support the loan request based on income qualifications, still may be in a position to obtain a mortgage loan with the assistance of a cosigner who will not live in the property but acts as a guarantor on the loan. And of all loan programs available only FHA loans offers this benefit.
The FHA 203k Loan is a popular tool for financing distressed properties. The benefit of the FHA 203k Loan is that it allows home buyers to finance the purchase price of a house and the subsequent cost of renovating the property post-settlement with one loan.