A lot of lenders can claim they can help you buy a home and pay for the things you'd like to do to make it your own. But actually getting you into your dream home in a timley manner can be another story altogether. The mortgage program that can help you buy your home and fix it up all in one payment is called the FHA 203k. And weighing your options when it comes to finding the right FHA 203k lender can prove to be a challenge.
Before we get into how to find the right FHA 203k lender, let's unpack what the 203k is and is not. The 203k is a home improvement loan for buyers or homeowners to refinance and remodel. Either scenario allows for the borrower to roll the cost of renovations directly into the mortgage rather than taking out a separate loan or second mortgage.
The 203k is not a financing option for new construction or do-it-yourself (DIY) projects. You must have an existing foundation or structure to work with, and you must hire a professional to do the work.
The 203k is from FHA so you will need a 3.5% down payment, and your mortgage interest rates will closely line up with the standard FHA rates. However, because it's a renovation loan with inherent risk and more work involved, interest rates and fees may be higher than a standard mortgage rate.
Now that you know more about what the 203k is, it's time to explore how to find an FHA 203k lender. Your lender will need to be FHA-approved first of all. They must also understand the renovation loan process. Here are a few questions to ask potential lenders:
- How many 203k Specialists do you have on staff?
- Do you work with REbuildUSA or other similar programs?
- Do you have a nationally recognized program manager on staff?
- How are your closing times for the FHA 203k?
- Do you host educational seminars for professionals like Continuing Education for Realtors?
- Do you offer educational material like videos and free buyer's guides?
- What are your rates and fees?
The right FHA 203k lender for you should be experienced, have the resources to help you and be able to back it up. This lender should be able to close your FHA 203k in a matter of weeks (6-8 weeks on average) instead of months (some horror stories tell of 6 months to simply close the loan). Find a lender who can close these sometimes-complicated loans in a timely, efficient manner so that you're not waiting months and months to even start the construction process. You can explore your options with a website like 203k Experts to find a team of professionals to help make your home improvement project run more smoothly.
Learn more about this mortgage option with "The FHA 203k Survival Guide" at the button below. The best FHA 203k lenders should help you educate yourself on the product and all of your options. This free eBook helps you get on that track.