FHA 203K Renovation Lending For Frederick Buyers
With the large number of foreclosures on the Frederick market, some fantastic deals are out there for the picking. The trouble is, once a buyer comes up with the down payment and the closing costs, what if the house needs work, as many REO properties do?
The FHA 203K program may be your answer. It is a program for the purchase or refinance of a home in need of repairs or renovation. The mortgage provides money to purchase the home or payoff the existing mortgage, and additional funds to be used for the rehabilitation.
How is the loan amount determined?
Example:
Sales Price: $200,000
Cost of Construction: 50,000
Contingency Reserve: 5,000
Rehab Related Costs: 5,000
Total Acquisition Cost: $260,000
Maximum Loan (260,000 x .965%) $250,900
Down Payment/Minimum Investment: $ 9,100
How Much Money is Needed?
The borrower will need the minimum 3.5% of the acquisition cost. In addition, there will be the normal closing costs, which can be paid by the buyer or the seller. The maximum seller contribution is 6%.
What repairs are not covered?
Luxury items and imrovements that do not become a permanent part of the real property, such as swimming pools, barbecue pits and hot tubs, are not allowed under this program. Check with your lender for a list of allowable improvements.
Contact us for our list of approved lenders.
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The Highland Group
Chris & Karen Highland * 301-831-9947
Turning Point Real Estate – 301-831-8232
email us: isell4u2@msn.com
Text Us: 301-401-5119
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