- Posted by: steve
- Category: fha
Are you considering taking out a FHA 203k Loan? If so, here’s everything you need to know about the associated mortgage rate.
Finding a home is an exciting adventure! Searching listings, touring open houses, and memorizing pictures from apps like Realtor and Zillow.com becomes a hobby and a pastime.
Most searching homeowners create a wish list of the various things they are looking for in their prospective home. However, that wish list sometimes pushes the perfect home out of the perfect price range.
What’s a prospective homeowner to do?
Consider finding a home that could be perfect with just a few renovations, and one that fits the budget.
In swoops the FHA 203K loan to save the day.
Offering the perfect opportunity to secure a home loan as well as secure additional money that can be used towards renovations, a 203K loan could be just what homeowners need to purchase their soon-to-be-perfect home.
Here’s some information that can help make the decision as to whether an FHA 203K loan is the right choice:
Great Fit For An FHA 203K Loan?
When choosing between all of the different loan types, there is a lot to consider.
Credit scores, down payment amount, pre-qualification status, finances, and a host of other important aspects all contribute to securing a loan. But, if the plan is to buy a home that needs a bit of TLC to stay on budget – an FHA 203K loan may be the answer.
Let’s Talk Loan Rates
Here’s the part of the loan equation that makes most people squint their eyes until they hear the number.
Rates for FHA 203K loans are not extravagant. They are also not necessarily the lowest, either. Usually coming in at just about 1% higher than regular home loan rates, the FHA 203K remains competitive.
Of course, these rates will fluctuate with the economy and will be based on credit. However, credit approvals in the mid 500’s are not uncommon. This loan can be appealing for those with a subpar credit score.
How To Qualify
Most of the typical qualification will still be standard practice with securing an FHA 203K loan. However, there are a few unique factors that will be figured into this type of loan.
Since this is the type of loan used primarily by homeowners that are wanting to rehab an existing piece of property, here’s what to expect:
- Contractor details
- Price estimate for project
- DIY plans
- Renovation plans
The best part, though, is that these loans don’t provide strict guidelines and stipulations for which contractor and/or service used to perform the work. And, as an added bonus, 3.5% is the typical down payment amount. Sayonara 20%!
What Can This Loan Do?
Fund Repairs And Purchase
These FHA 203K loans can not only provide the funds to purchase a home but can, also, provide funds to renovate the home. This gives homeowners a type of freedom to customize their perfect home.
No one wants to be living in a friend’s garage or a relative’s guest room while they renovate. An FHA 203K loan provides money towards living expenses up to six months.
Providing housing options eliminates many of the stresses that homeowners face if they choose to renovate with a different type of loan.
To 203K or Not To 203K?
Knowing the mortgage rate on an FHA 203K loan can help make the decision if this type of loan is a perfect fit.
Chatting with a mortgage lender that knows these types of loans well can help provide phenomenal insight. Also, working with a knowledgeable lender can offer a wealth of knowledge when it comes to choosing a contractor or company that can help create the perfect home.
Ready to finance the soon-to-be-perfect home? Contact a lender that can help track the perfect loan for the perfect home.