Maybe you recently toured a home in your dream Elkton neighborhood and school district, and it had the perfect layout, but the kitchen, bathrooms, and flooring needed major renovations. We’re guessing you were seeing dollar signs adding up as you walked through the outdated home, and decided to move on to the next available house on your list. The house you just walked out on could be “the one” with a few renovations. That’s where the FHA 203(k) loan comes in.
Most Elkton homebuyers know that the cost of rehabilitating a house can be very expensive, particularly for first-time homebuyers who are oftentimes using most of their financial resources just to buy the house. The FHA 203(k) loan allows new home buyers to finance their home purchase and home improvements in one mortgage loan—a very cost-effective approach to buying a house.
With the FHA 203(k) loan and a vision, you can turn any fixer-upper into “the one.” In a market where there’s a shortage in housing inventory, the FHA 203(k) loan allows buyers to mortgage the unmortgagable. In other words, homebuyers have the opportunity to upgrade the things that they may not have otherwise had the ability to do without paying for the renovations in cash or putting them on credit cards with high-interest rates. Find out what this newlywed couple was able to with a FHA 203(k) loan.
One of the many FHA 203(k) loan benefits includes building equity before moving in. Making improvements increases the value of your home, and the equity will instantly build up when you finance with the 203(k). Let’s say the home you purchase is worth $100,000 and you invest $20,000 worth of repairs. By investing this money into repairs, you are able to improve the property’s value from day one! Plus, it’s cheaper to finance these improvements with the FHA 203(k) loan because the renovation costs have already been rolled into your monthly mortgage payment. Without the 203(k) loan, you would have to finance these updates with cash or credit cards, which could end up costing you more money in the long run.