A FHA 203(k) Full loan merges the repair costs into the home financing.
It’s an excellent option for homeowners who do not want separate mortgage applications and processes for buying a home and fixing it to make it a dream one.
The beauty of this option lies in the higher coverage: up to 50% of the improved value without exception. With a $150,000 repair amount limit, the homeowners are given much elbow room in extensive structural additions.
A downside of this option however is the more complex paperwork required in the process. A detailed proposal of the improvements with cost estimates of the repairs from contractors is required. The home will then be evaluated on the basis of the overall improved value by an FHA-approved cost consultant. The fees for such specialists can also be included in the plan. Another tradeoff is the higher interest rate. The Full 203(k) loan is usually 0.2 to 0.5 percent higher because of the greater risks involved.
Again, these negative considerations are offset by the wide range and variety of improvements a homeowner may avail of. Basically any improvement is allowed as long as it ups the value of the home. It may be a newly refurbished kitchen or even an entirely new wing. High quality materials such as granite and hardwood floors are valuable investments to any home and these are allowed under the Full 203(k) FHA plan. However, there are some exceptional lavish treats which cannot be included in a 203(k) plan, such as a tennis court.
Do you like the high repair amount limits of this option but can’t decide where to start?
Ask your PrimeLending mortgage consultants on how you can benefit from getting a Full FHA Loan. Contact us today!