Can’t Get a Loan on Your Dream Home Because it Needs Work

You’ve spent months searching for your dream home and you have finally found one you can afford.

It is in the right school district, it has enough bedrooms and baths. Everything you wanted at a price

you can afford. You make the offer, it gets accepted but, the appraisal comes back and the condition

is noted as less than “average”. This can cause alarm bells to go off for almost every lender, and your

loan has a good chance of being turned down.

The fact is, you already knew it needed work. It was a foreclosure or an estate sale and the current

owner is not willing to do any work to bring the home to “average” or better condition. You are

willing to do the work and that was part of your original plan to begin with. You can’t do the work

until you own the house and you can’t own the house until the work is done.

Don’t despair this FHA program is designed to help you. Talk to your lender about the FHA 203(k)

program. The primary reason that the government provides funding to the Department of Housing

and Urban Development is to allow lenders to make loans they would normally have to deny. And

since the FHA owns a lot of foreclosed homes in need of repair they needed a program that

addressed this issue.

HUD’s stated goal is to expand the opportunities for home ownership while helping declining

neighborhoods to stay stable and revitalize. The FHA 203(k) program helps HUD to meet these

goals by providing funding for the repair and rehabilitation of single family residences.

The FHA 203(k) program might be just what you need if you are looking to purchase a home in

need of repairs or updating by providing insurance to lenders who make these loans. Lenders are

further encouraged to make these types of loans by helping them to meet their responsibilities

under the Community Re-investment Act.

Under normal conditions you would need to secure a loan for the home (if it is in need of repairs

that can be a difficult proposition) and then secure a second (usually higher interest) loan to do the

repairs. Finally, after the repairs are complete you would need to refinance to consolidate the two

loans. That would leave you holding the bag for three appraisals and loan closing costs.

Under the FHA 203(k) program the original loan is made for the projected market value of the

home after the repairs have been completed.

After you have found your dream home talk to your real estate agent, they will get the process

started by providing a marketability analysis that will take into account the repairs needed, the

estimated cost to repair and a projected value of the home after the repairs have been completed.

You will need to do some research to completely understand the requirements, but in general,

luxury items will not be allowed. There are certain standards and required items that will have to

be addressed. These include items like weather stripping, caulking, insulation, a/c and heating.

So, if your loan has been denied due to the condition of the home, don’t despair. You are not the first

person to try and buy a fixer upper. There are loan programs that are designed with you in mind.

The Department of Housing and Urban Development wants to help. They have designed the FHA

203(k) program with you in mind!

You can get more information about this and other loan programs by visiting my blog

http://sanantonio-mortgage-bestratefinder.com If you have any questions or comments please

contact me! http://sanantonio-mortgage-bestratefinder.com