When we imagine purchasing a home, it is easy to presume that the house has been freshly built and in great condition. However, this isn’t always true; many buyers decide to purchase an older property with much less attractive features. There can be numerous motivations for this type of deal – from searching for a fixer-upper project to finding something affordable.

Obtaining a mortgage for this type of property used to be a hard and expensive endeavor, with complex home improvement loans that included elevated interest rates, brief repayment terms, and balloon payments. But now – thanks to the FHA 203(k) Rehabilitation Loan – things are a lot easier. This mortgage option offers borrowers the opportunity to finance either the purchase or refinance of a home along with its renovation, known as “rehabilitation,” all through one single loan.

In times of federally declared natural disasters that cause damage or destruction to property, the FHA’s 203(k) program is an ideal choice for borrowers. This rehab loan can finance the essential repairs so you can restore your home.

Advantages of a Rehab Refinance

Refinancing with the FHA 203(k) Rehabilitation Loan has a variety of tangible benefits. With this particular loan, you not only have the opportunity to refinance your property and generate home equity through renovations and upgrades, but also purchase an older house at extremely favorable interest rates. You can personalize your real estate according to your own specifications while simultaneously boosting its value through renovations!

Moreover, the FHA 203(k) loan is an ideal way to purchase or refinance your home even if you don’t possess a high credit score, don’t want to make a substantial down payment or have to deal with sizable interest rates. This beneficial product of FHA mortgages ensures that buyers can acquire their dream property in less time and at lower costs than conventional loans.

Eligible Rehabilitation Activities

When it comes to the FHA 203(k) Rehabilitation Loan, there are certain limitations and restrictions on how much of a rehabilitation can be covered. These limits range from minor expenses all the way up to complete reconstruction of the property – with costs needing to be at least $5,000 in order for them to qualify. Even if a property needs demolishing or razing during its renovation process, it is still eligible under this loan as long as its original foundation remains intact.

According to the US Department of Housing and Urban Development, borrowers may fund a variety of renovations with Section 203(k) financing, such as:

  • Structural alterations and reconstruction
  • Modernization and improvements to the home’s function
  • Elimination of health and safety hazards
  • Changes that improve appearance and eliminate obsolescence
  • Reconditioning or replacing plumbing; installing a well and/or septic system
  • Adding or replacing roofing, gutters, and downspouts
  • Adding or replacing floors and/or floor treatments
  • Major landscape work and site improvements
  • Enhancing accessibility for a disabled person
  • Making energy conservation improvements

If you’re ready to learn more about mortgage refinancing options, Sword Mortgage is ready to help

At Sword Mortgage, we believe that an informed customer is the best kind of customer. Our loan officers will take the time to fully explain your options and help you understand all aspects of your unique situation before making a decision. Call 770-826-0222 to speak to a mortgage professional or get started on your loan application process today.