Section 203(k) is an amendment to the National Housing Act and it expanded HUD's role in housing revitalization. Simply
put, 203(k) is a Federal Housing Administration (FHA) insured mortgage you use to buy and fix-up a home, or you
can use to refinance and remodel the home you already own. In either case the 203(k) is a "one
loan, one closing" program and a surprisingly simple way to remodel or completely rehab a home.
The
203(k) has two choices for completing almost every fix-up project imaginable; the Standard 203(k)
- or simply the 203(k) - and the Streamline "K". The most distinct difference between the "K"
programs is the extent of rehabilitation each program supports. The 203(k) is comprehensive, offering a solution
to nearly every rehabilitation project you can imagine. The Streamline "K" is ideal when improvements will
be non-structural and the project will cost less than $35,000. Both are reasons the Streamline
"K" is protrayed to be quicker and easier, and most commonly used with minor improvement and updating projects.
Worth noting is health and safety. The first priorities of Section 203(k) are health and safety.
Energy efficiency is equally important but not required as is the case with health and safety.
To take advantage of the 203(k) you'll need a "fixer-upper" to start. Since mortgage delinquencies,
short sales and foreclosures continue to rise, and "foreclosure stripping" has emerged as the latest housing problem,
finding a home in need of a face-lift, and suitably priced, won't be as difficult as it has been in the past.
The 203(k) program does procedurally set itself apart from other, more traditional mortgages. However,
anyone considering a 203(k) project is reminded that the topics "
Pre-Qualification vs Pre-Approval" and "
Application Process" apply the same to this program as with any other mortgage.
Homebuyers should not overlook the benefits of the 203(k). Although the program may at first appear daunting, scores
of happy homeowners conquered their doubts and profited from the program.
If you plan to purchase and rehab a home the links to the right will help you understand the
203(k) mortgage process. Or, you can contact me for additional information to help decide whether the 203(k) is the right choice for you.
