Our assistant and Realtor Jessica recently purchased her very first home with an FHA 203(k) Rehab Mortgage Insurance Loan. This is the first time we assisted a home purchase with this type of loan and we decided we’d like to run a series of articles about the loan, and how her progress with rehabbing the house is coming along.
You can see the FHA’s full description here.
The 203(k) loan allow’s a home buyer to roll in up to $30,000 of the repair and rehab costs into the home’s purchase. This is a “single, long term, fixed or adjustable rate loan” unlike costly improvement loans.
They determine the value of the loan in one of two ways: “(1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110% of the appraised value of the property after rehabilitation, whichever is less.” Jessica’s home was valued with the cost of rehab in mind. She obtained bids from several construction vendors that were then submitted with the loan application.
Examples of the types of improvements that borrowers may make are modernization, changes in appearance, replacing roofs or floors, or energy conservation.
In order to apply for this loan she used Sheila Verde, an FHA approved lender.
As you can see from the pictures, Jessica has some serious painting to do, as well as installing a new kitchen and improving the curb appeal. We’re excited to follow her journey as she makes this Sanford home her own.