Is It Safe for a First Time Homebuyer to Buy a Fixer Upper

With the infusion in the market of many short sale and foreclosure homes, come many properties that are in need of repairs ,as such they do not qualify for traditional FHA or VA loans. The reason they do not qualify for these loans is the strict guidelines that the VA and FHA have on the proper conditions of the home.

This has traditionally made these loans desirable for homebuyers in that these institutions protect them from purchasing homes that need a lot repairs.

Today this is almost an impediment for buyers because these homes are affordable and desirable since many do not need that much work to qualify but too much to be considered.

Enter the Rehab 203k loan. This loan can be used to purchase these homes. Historically when a homebuyer wants to purchase a home in need of repair the homebuyers has to obtain financing first to purchase the dwelling; and additional financing to do the work, then a permanent mortgage when the work is completed to pay off the interim loans. This usually involves high interest rates and large down payments.

With a 203K loan the buyer can get just one mortgage loan, at a long-term fixed rate to both purchase the property and do the rehabilitation of the property. The buyers closes on the property prior to the work being done and the money allotted for the rehab is held back in escrow and released as the work is being done.

An FHA inspector handles all of inspections of the property so the new home owner can be assured that the work is being done properly and on time.

If a rehab loan is something you are considering make sure you consult the professionals. You need to be working with a Realtor/lender team that has done many of these loans and can guide you successfully through the process.

Contact me today for more information.

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