We’ve all seen the recent headlines: Record Home Foreclosures! Falling Home Values! While there’s no doubt recent events have changed the housing market significantly, the headlines don’t mention the silver lining for prospective home buyers. For many who were previously shut out by inflation in the housing market, prices are now falling into a more affordable range, and there is a wide selection of existing homes for sale.
The keyword is: existing. Buyers with a strong preference for new homes should reconsider that preference in the current market where new construction has drastically slowed. There are better deals and a much wider selection in existing housing, with some real bargains in foreclosure properties in particular.
Fortunately, prospective homeowners have an answer to their concerns about the inevitable maintenance, repair, and rehabilitation costs of making existing homes ready for move-in: the FHA 203K rehab loan program. This program is targeted exclusively to buyers of existing properties and owners making improvements to homes they already occupy, and is limited to owner-occupied properties of up to 4 units. Qualifying properties can be almost new – finished as little as one year ago – and may need major structural and systems repairs, or only minor improvements such as new carpeting. The program is open to buyers of all income levels.
Among other advantages, FHA 203K loans can reduce two or more loans and their associated costs into a single, one-time loan. They offer buyers firm estimates on costs for the improvements they want to make and an estimate of after-improvement value, before they’ve completed purchase of the property. Buyers can even finance the first six months of mortgage payments, allowing them to live elsewhere while home improvements are underway. The minimum requirement for eligible home improvement projects under the program is $5,000, with eligible projects ranging from additions and major structural work to carpeting and roof gutters – meaning that just about any existing home will qualify.
Homeowners, realtors and buyers should all be aware of FHA 203K rehab loans. They can help everyone see existing homes – even distressed properties – in a whole new light.