Finding the perfect house and getting qualified for a loan is a tough task, but that isn’t always where the difficulties end. Often plans of making renovations or changes to a new house remain unfulfilled because of the extremely high costs of renovation work.
What Type of 203K Loan Will Benefit you the Most?
An FHA 203K Rehab Loan can be extremely useful to those stuck in this situation, as it can cover the cost of not only the home mortgage but the costs of repairs and improvements to the home as well.
What is the FHA 203K Rehab Loan Program?
This is primarily a home loan program that allows borrowers to cover their renovation costs along with the cost of home purchase under one program. Depending on the requirement of the borrower and the kind of repairs the home needs, these loans are classified under 2 categories:
- Streamline 203K Loan
- Standard 203K Loan
Streamline 203K Loan
An FHA Streamline 203K loan is used when the cost of repairs and renovation is up to $35,000. This loan covers only cosmetic, uncomplicated and minor changes to the house; no structural changes are allowed under this loan. The approval process for this type of loan is quite easy and flexible for home buyers. Minor repairs to the roof, floor coverings, painting, weatherization of windows, basement renovation, and waterproofing are a few examples covered under this loan.
Standard 203K Loan
This loan is designed to cover the complex, structural changes to a house; a Standard or Regular 203K mortgage is used to finance the extensive and major repairs of property. Though there is no capping, however, documentation demands are more extensive by 203K Loan lenders in the case of a standard loan.
Significant home rehabilitation, new construction, additions, and architectural changes are a few examples covered under a Standard 203K Loan.
Streamline Vs Standard 203K Loan
- Purpose: Streamline 203K Loans are for minor and cosmetic changes while Standard Loans cover all complex and structural changes.
- Habitable: For Streamline 203K Loans, the property should be habitable for the entire period of renovation. If the home is not acceptable for living in during renovations, it calls for a Standard 203K Loan.
- Settlement: Easy settlement options are available under Streamline 203K Rehab Loans, but under a Standard Loan mortgage, settlements are looked after by an assigned consultant.
Drew Mortgage Associates, Boston’s top mortgage dealers are experts in helping applicants select appropriate loans for their situations and helping them qualify for it.