If you’ve ever dreamed of buying a fixer and making it your own but lacked the money to do the actual fixing, you may wish to consider buying with a 203(k) rehabilitation loan.
We come across homes for sale in Long Beach, Lakewood, and Signal Hill all the time that need lots of work — short sales, foreclosures, probates and even regular sales. Often, buyers pass on those fixer-upper homes because they wonder where the money would come from to fix them. Homes for sale that are “turnkey” or move-in ready fetch top dollar even in today’s market, while fixers can purchased for relatively low prices.
Buying with a Section 203Kk) loan enables home buyers to finance both the purchae of a home and the cost of its rehabilitation with a single mortgage.
For less extensive repairs and improvements, a streamlined 203(K) loan may be appropriate. The cost of the rehabilitation must be at least $5,000 and can be enough to cover virtual reconstruction. The value of the property is determined by either (1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110 percent of the appraised value of the property after rehabilitation, whichever is less.
The types of improvements that borrowers may make using Section 203(k) financing include:
- structural repairs
- modernization and improvements to the home’s function
- elimination of health and safety hazards
- changes that improve appearance and eliminate obsolescence
- reconditioning or replacing plumbing
- adding or replacing roofing, gutters and downspouts
- adding or replacing floors and/or floor treatments
- major landscape work and site improvements
- enhancing accessibility for a disabled person
- making energy conservation improvements
If you’d like more information about 203(k) loans or if you’d like a referral to a lender who can help you prequalify, please email or call The Shannon Jones Team today. We’d be happy to help you find the fixer of your dreams!