If you've been passing up homes that require repairs, there’s renewed interest in the 203(k) FHA loan program that lets qualifying candidates borrow a single loan with a 3.5 percent down payment to cover both the home’s selling price and the cost of licensed contract work to improve the property.
Popularity in the 203(k) FHA loan program, or Rehab loan as it is often called, has nearly doubled since last year due to the large inventory of REO homes. This years, demand is on pace to double again.
The main advantage of this program is it allows buyers to purchase a home that needs work and not have to come out of pocket with cash to complete the repairs. The biggest disadvantages is most lenders aren't experienced with Rehab loans and show little interest in promoting them because they can take up to 60 days to close.
Even though the application process is long and it is difficult to find a lender versed in doing them, the FHA Rehab loan may the rare modern-day wild card loan that keeps the industry afloat. Helping our Buyers get the best deals, often in area they otherwise couldn’t afford, and helping us close on more deals. . . sounds like a win-win to me!
– I have an REO with Wells Fargo right now that is a perfect candidate for this financing. I’ll let you know how it goes.