February 21st, 2013 categories: Buyers
Farragut bargain hunters ought to not overlook short sales and foreclosures that are in need of significant repairs. With the help of FHA 203(K) loans, Farragut buyers are able to wrap any necessary repairs into their mortgage when they buy a short sale or foreclosure. Read on for more information about 203(K) loans for fixer-uppers.
There are two types of 203(K) loans, regular (for structural repairs) and streamlined (for non structural repairs). These loans are only available to Farragut buyers who plan on making the home their primary residence. A wide range of Farragut short sales and foreclosures can qualify for these loans including: homes that have been torn down (so long as part of the structure remains), one-to-four family homes, condos (if they’re approved for FHA loans), and existing construction less than a year old.
The total loan amount for 203(K) loans is based on the appraised value once the home one repairs are completed. For Farragut home buyers wanting to use a 203(K) loan to buy short sales or foreclosures, they can get into the home with as little as 3.5% down. Once the loan has closed, the buyer has 6 months to make the necessary repairs on the Farragut short sale or foreclosure.
A 203(K) loan can be used to make many different types of improvements on Farragut short sale or foreclosure. While the loan prohibits the funds for adding luxury items to the home, it will all you to add additional rooms, paint, or make other necessary updates to the home. It can also be used to make the short sale or foreclosure energy efficient, replace heating and cooling systems, get a new roof, update siding, among many other things. For a complete list of what repairs can be made to a short sale or foreclosure, visit the Department of Housing and Urban Development Website.
One thing to consider about these loans is that they can be more expensive than traditional financing. There interest rates can be slightly higher and private mortgage invsurance is required on these loans. In addition, Farragut buyers will have to pay for a building to consultant to estimate the cost of repairs and ensure the repairs will be up to government health and safety standards. Finally, these types of loans are not your average mortgage loan, so be sure to find a loan officer who has experience with them. In general, they can take longer to process than traditional loans, so be sure you give yourself enough time when planning your move.
Are you thinking about buying a Farragut short sale or foreclosure this year? Have you considered using a 203(K) loan to make repairs? Please let us know if there is anyway Knoxville Home Team can assist you. Rick can be reached at 865-696-9002 or send via email at [email protected]. Kati can be contacted at 865-392-5880 or via email at [email protected]. Also, be sure to check out our Farragut Foreclosure and Short Sale Home Search Page.