NC 203K Renovation Loan

Many people are uneasy about buying a new home after the recent housing crash. Would-be homeowners are more skeptical now than ever and have many questions about home ownership they may not have asked before.

If you are in this group, you may be asking yourself if home ownership is affordable or if it is a safe and smart move to make for your family. Fortunately, this is a buyer’s market right now and there are options out there to get people just like you into a home quickly and in a manner that is affordable.

I Can’t Afford to Own My Own Home

So many people are convinced that they cannot possibly afford to own their own home. Maybe you feel like you just don’t have the money to set aside for those huge down payments you have to make.

With the economy in a rut, setting aside 15-20% of a house’s value for a down payment can seem impossible. Even if you managed it, you would have no money for renovations or any emergencies that might crop up.

If you didn’t get an NC 203K renovation loan, you couldn’t possibly spend potentially tens of thousands more on renovations out of pocket, and good luck getting a second loan for a decent rate. Fortunately, 203K loans are available and can completely change your perspective.

The Advantage of the 203K Loan

FHA-backed 203K loans were created with the intention of getting a first time buyer into a new home without burdening them with costs they could never handle. There is a chance that you looked at foreclosed distressed properties and considered them for their affordability.

These are great options for a first time buyer since they come at a low cost, and a 203K loan allows you to fix whatever might be wrong with them. A 203K loan wraps up the cost of the home loan and the costs associated with needed renovations in the same package. The down payment is substantially lower than a standard loan and the interest rates are currently at historical lows.

Banks will offer foreclosed properties for a substantial value, meaning you can scoop one up and afford the renovations it will require. Since the loan covers renovations, there is no huge out of pocket expense to worry about.

Use a Seasoned Realtor & Lender

If you have a real estate agent, you will want to discuss the possibility of a 203K loan with them and if you don’t you will want to discuss the option with multiple lenders. If a 203K loan turns out to be a good option for you, distressed properties are waiting to be picked up and banks are anxious to get rid of them.

You can search distressed homes in desirable neighborhoods and get them well below market value had they been in better condition. The money you spend on renovations can be made up plus some in the value you add and you can end up living in the home of your dreams for less than you thought.

The US mortgage market has recently experienced a tremendous growth in the demand for FHA 203K loans. Many unscrupulous loan officers and lenders are looking to get their stake in the market while it is hot. However, these loans are not to be handled by rookies.

As with any loan, you want to be very careful about whom you choose to borrow from. You have the right to question your potential lenders to be sure they are the right choice for you. The following are three very important questions you should ask every potential lender.

1.) How Many 203K Renovation Loans has Your Agency Closed?

If the lender has closed fewer than 10 or so, they might not be an appropriate or safe choice for you. FHA 203k loans require experience to fully understand. You don’t want to deal with a lender who doesn’t know all the ins and outs of the package.

2.) Who will be servicing the loan?

Who will be disbursing the loan funds? Do they have a record of being on time? Some lenders may hold funds for months before paying out. You don’t want contractors looking for their money to come knocking on your door because the lender is not properly handling payments. 203K loans should be disbursed within one week of the draw request.

3.) Do you offer both streamline 203K loans and full 203K loans?

You may be wondering why this matters. Don’t you just need a streamline 203K loan? The caveat here is that there are some issues that can cause a streamline 203K loan to flip to a full 203K loan. If you end up in this situation, but your lender doesn’t handle full 203K loans, you can end up with a dead loan. You want a lender which has access to both.

Because of the current demand for renovation loans, they are becoming very easy to get but they are also attracting disreputable lenders. You want to avoid shopping based solely upon the rate offered or the cheapest estimate. Above all else, make sure you are confident in the capabilities of your lender so you can feel comfortable with your loan further down the road.