When choosing a loan, it is always very important to weigh the pros and cons of how each loan can benefit you and your financial needs. A 203K Rehab Loan caters to those in need of rehabilitation and renovation projects. With an array of concessionary policies, a 203K Loan can help you cover the costs of renovation projects, however, it is not always suitable for every type of borrower. The following is a short summary of the advantages & disadvantages of an FHA 203K Rehab Loan.
Advantages and Disadvantages of FHA 203K Rehab Loan
Pros of an FHA 203K Rehab Loan:
• Qualification is easy for a 203K rehab loan. Credit scores as low as 640 AND Higher Debt to Income (DTI) are eligible.
• No current equity is a major advantage under a 203K loan.
• It covers a wide range of rehabilitation projects; this includes all kinds of renovations from windows to kitchens, bathrooms to bedrooms and rooftops to flooring.
• 203K Loans have lower interest rates when compared to other construction loans. Lower down payments (3.5%) and longer repayment periods are available as well.
• Saves time and money for borrowers as it covers the purchase price and rehabilitation all under one program.
• Lenders and borrowers feel secure as this loan is an insured government initiative.
Cons of an FHA 203K Rehab Loan:
• Because this loan’s requirements and documentation are specific, a 203K expert is necessary for a smooth application.
• A down payment, though minimal, is required.
• This loan is not open to investors.
• Extra paperwork is required compared to other mortgages.
• Additional fees are unavoidable. Mortgage insurance, title transfer fees, consultant fees are inevitable.
• The process of this loan is a bit longer than conventional loans.
• Your home needs to be at least one-year-old to be eligible for remodeling.
Drew Mortgage Associates, a mortgage lender in Boston, Massachusetts can assist you in qualifying for a loan that suits your financial needs and helps you speed up the process a bit. Support from an expert can help accelerate the entire loan process and make your dream of buying and creating your perfect house become a reality. You can explain all of your objectives, plans and financial constraints to their associates and they will help you accordingly to gauge which particular home loan program will fit your needs the best.