FHA 203K: Home Purchase and Improvement in One Loan
If you live in Fort Lauderdale, you are most probably going to be confronted with numerous options when it comes to loans that are available, each with a varying purpose. Nonetheless, there are still many who are doubtful on whether they will apply for a specific loan or just let go of the idea. Fear, more often than not, stems from ignorance on what the loan can do for their financial life and unwillingness to handle sky-high interest rates. With this, one of the best you can take is the FHA 203k rehab loan, which will be discussed further in the rest of this article. This type of loan is often underutilized and overlooked, even in spite of the potential benefits it can provide.
What Is FHA 203k Loan?
FHA stands for Federal Housing Administration, which has been established in 1934 with the intention of being instrumental towards improving housing conditions of Americans and making it easier for the citizens to have a place to dwell. The FHA 203k renovation loan, on the other hand, is simply one of their programs offered to assist people who would like to buy a new house and have it renovated. The loan for purchase and renovation comes in one package, which is considered by many to be its biggest advantage. However, it is not as straightforward as it seems. The funds will only be released once all of the repair works have been taken care of.
There are two types of FHA 203k loans: Streamlined 203k and the Standard 203k. In the case of the Standard 203k loan, the loan is extended for major rehabilitation work or if there are structural changes that should be done. This is the loan extended when the amount needed is more than $35,000. On the other hand, if the amount is lower than the latter, the Streamlined 203k loan is going to be applied. This all-in-one loan is perfect if you only have minor repairs to take care of, which will most likely not require consultation with experts in the construction industry, such as engineers and architectures.
Benefits of FHA 203k Renovation Loan
The convenience offered by the FHA 203k loan, as it has been mentioned, is perhaps one of its biggest benefits. There is no more need for you to apply different types of loan for a purchase and a renovation. This will cut down all the paperwork you need to take care of, such as the documents you need to submit for application. It will also enable you to save a significant amount of time since two loans are being processed simultaneously.
Having significantly lower interest rate is another benefit many people enjoy from this kind of loan, which is most probably because of the involvement of the federal government to insure the loan from respective lenders.