How man home buyers can remember saying, “That house was perfect except…” and how many of you homeowners have said, “This house could use an upgrade?” What about you realtors who have that 3 bedroom house on the market 90+ days because it only has 1 ½ baths? It could be the color scheme of the house, or the antiquated appliances, or the carpet, or the unfinished basement. These houses require someone to either access their savings, use credit cards, or take out an installment loan from a hardware superstore to make the fixer upper their dream home. Well, you no longer have to depend on the aforementioned, non-tax deductible, double-digit interest rate options. Whether you are purchasing a new home or looking to upgrade your current home, the government has come to the rescue with the Federal Housing Administration Renovation Loan (a.k.a. FHA 203K). Right now these tax deductible 30 year fixed rate loans have been averaging in the mid to low 5%’s. The 203K has been around for years. Many are not aware of its existence because only a small percentage of lenders have access to the program, and those that do have no interest in originating them. I love them! What are some of the typical projects people use the renovation loan for? Foreclosure prevention Bringing an older home up to code Turning a single family into a duplex or in-law suite Accessibility improvements for persons with disabilities Upgrading plumbing, electrical, heating, and ventilation systems Upgrading to a “green” home…windows…solar…wind Upgrading appliances…refrigerators…ovens…dishwashers…washer/dryers Room additions for the right house that is the wrong size. Basement finishing, remodeling, waterproofing Decks, patios, or porches. What are the advantages of these loans? It gives sellers an alternative to having to perform the improvements, it allows the buyers to fix up their almost dream home with no extra cash out of pocket, and it allows realtors to turn renters into homeowner’s while moving stale listings. Another advantage of The FHA Rehabilitation loan is it allows for the buyer/owner to use up to 110% of the after improved value. There is one caveat. There is a loan limit of approximately $281,000 for these loans in Centre and surrounding counties. So those with home improvement projects that have been put on hold because of decreasing savings accounts and increasing credit cards interest rates, will be relieved to know this government insured loan is a more appealing option. Rates are going to remain low for the next several months, so now is the perfect time to complete the vision you have for your dream home. Brian Allen is a mortgage advisor for a nationally chartered bank. He is based in State College, PA. If you would like to find out more about the FHA 203K, he can be reached at 814.272.0125 or emailed at firstname.lastname@example.org . Brian can also be heard every Saturday morning at 11am as the last segment of Coaches Corner, 970 AM WBLF.
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