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Home buyers and homeowners who are seeking to buy and rehabilitate owner occupied properties, can apply for Streamline 203(K) programs that are used to refinance existing mortgages and rehab homes. In many cases buyers wanting to purchase and rehab properties, are faced with having to first obtain a mortgage to buy the homes and then, secure additional financing to do the rehabilitation work.
One of the biggest benefits of FHA 203K loans is that borrowers can obtain a single loan at a long term fixed or adjustable rate. However this rehab/construction loan is typically at a higher interest rate and amortized over a short window of time. This financing option encompasses both the purchase of the residence and the funds needed for the rehab construction. The amount of the mortgage is calculated, based upon the estimated value of the home once the work has been completed. Sound a little confusing? An experienced mortgage professional familiar with the requirements for 203(k) streamline financing, can help guide you through the process.
203K Streamline Mortgage Highlights - Intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required. The total costs of repairs are not to exceed $35,000. There are no minimum repair costs.
203 K Refinance Loans - May finance up to 97.75% of the "to be improved value" or "as is appraised value plus the total cost of all rehabilitation/repairs" (whichever is lowest).
203 K Purchase Mortgage - May finance up to 96.5% of the "to be improved" value of the appraisal or 96.5% of the sales price plus the total cost of all rehabilitation/repairs (whichever is lowest).
Your Mortgage professional can properly explain and guide you through the process.