FHA 203k Loans Stimulate The Economy
As a former psychology major, finding solutions to problems has always been a subject of interest to me. I hope that my writing will give people the confidence to make important decisions about FHA loans. For additional FHA loan information, please visit http://www.fhamortgagebank.com/fhaLoan.php.
There has been a fair amount of press recently surrounding the FHA’s home loan programs and a lot of it has been negative. Many people are more than willing to disparage how low the FHA’s reserves have become, which became a hot topic during the private audit done earlier this year. But many of these same people seem to have overlooked the ways in which the FHA has been positively contributing to the efforts to return the economy to a stronger state.
Standard vs. 203k
Most people have heard of FHA loans, but are not familiar with the 203k loan, specifically. The FHA loans that are granted under the terms of section 203k of the National Housing Act can help homeowners turn foreclosed or damaged homes into a wonderful place to live.
This loan is a rehabilitation program which allows borrowers to finance the cost of home repairs and certain types of home renovations into the loan, wither it be a home they are purchasing or one they already own.
The same rules apply to these loans as to standard FHA loans. They can only be used on homes that the homeowners plan to occupy as their primary residence and applicants must be prepared to document their income and employment history.
Making Sure the Homeowner and the Lender are Protected
Many people are recognize the value of these loans and their ability to stimulate the housing market, but are not aware of the safeguards that are in place to ensure that they are used properly and do not cause the homeowner to end up “under water.”
Before the loan can be approved, an appraisal is completed in order to document the current value of the home, as well as what the value will be once the planned repairs and renovations have been completed.
Contractors who perform the repairs and renovations financed by this program must comply to FHA guidelines, so it is important to find one who has worked with the 203K loan program before, or at least is familiar with the program’s regulations. Also important to note is that the work must begin within thirty days of closing and must be complete within six months.
Not Everything Qualifies
Although the list of repairs and renovations that can be financed with an FHA 203k loan is extensive, there are some projects which are ineligible for this type of loan. You may fiance roof repair, any plumbing or electrical work, and any renovations that add tangible value to the house, but you may not repair a cracked foundation or do any other major structural repairs.
The FHA 203k loan also does not allow homeowners to finance luxury items, such as pools, but does allow them to use high-end materials, such as granite, for their renovations.
The FHA 203k program can help people turn foreclosed or otherwise damaged homes into a very pleasant and comfortable home. With this program, the FHA is helping people increase the value of their property, stimulating both the housing market and the economy itself.
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