Home Improvement With FHA 203k Loans In Buying Fixer Upper
This Article Is About Home Improvement With FHA 203k Loans In Buying Fixer Upper
The housing market is booming. Never in history has home prices skyrocketed as it has in recent years. Home prices surged a whopping 14% last year. That is a 14% increase in just one year. Home prices have been steadily increasing for the past 7 years. HUD and the Federal Housing Finance Agency (FHFA) have been increasing FHA and Conforming Loan Limits for the past 5 years due to skyrocketing home prices forcing many homebuyers priced out of the home buying market. Home prices have been skyrocketing year after year since 2013 with no signs of correction.
Many are hoping and wanting a housing market correction. However, with mortgage rates at historic lows and demand for housing outpacing inventory, a housing bubble and/or market correction seems very unlikely. Many homebuyers and homeowners are opting for an FHA 203k loan and buying a fixer-upper or refinancing their current home loan to a 203k loan and renovating their homes instead of upgrading and moving to a newer home. In this article, we will discuss and cover improving your home or buying a fixer-upper with an FHA 203k loan in today’s booming housing market.
Benefits Of Buying A Fixer Upper In Today’s Hot Housing Market
Many homeowners outgrow their current homes and think about selling their homes to a bigger home. Home Improvement With FHA 203k Loans In Buying Fixer Upper is very popular. Home Improvement With FHA 203k Loans In Buying Fixer Upper only requires 3.5% of the after repaired value. There is a lot of stress and cost involved in selling a current home and moving to a larger home. Selling a current home and buying a bigger home is a process. There are also many costs involved such as realtor’s commissions and furnishing a new home.
Qualifying For Home Improvement With FHA 203k Loans
Qualifying for a mortgage loan is another important thing to consider. Need to sell a home first in order to qualify for another home. Or can the borrower qualify for both mortgage loans? If cannot qualify for both mortgage loans, then need to time the sale of a current property with the purchase simultaneously. Another option a homeowner who needs more space has is doing a major home improvement to their existing home.
Many consider home improvement where instead of buying another home, they consider improving their current home by doing a room addition and updating their whole house. Staying at the current home and renovating it can be done by refinancing with an FHA 203k Loan. All the borrower needs to do is to qualify for an FHA Loan. Gustan Cho Associates has no lender overlays on FHA 203k Loans.
Things To Consider When Considering Doing Major Renovations
Again, doing major renovations to an existing home requires a lot of planning such as hiring an architect to do the plans and hiring a general contractor. Construction can take months and need to consider living accommodations. Is a homeowner going to live in the home while it is being renovated? Is a homeowner going to live with friends or relatives or rent a temporary furnished home? Or is the homeowner going to stay at the home while renovations are being done?
Things To Consider When Deciding Home Improvement With FHA 203k Loans
One of the major things homeowners need to keep in mind when deciding on an extensive home improvement project is that they do not over-improve. Having the biggest home in the neighborhood or the area is not a good idea. Homeowners who have a $1,000,000 home in an area that the median housing value is $500,000 is not a good idea. This is because they will get into problems when it is time to sell their home or when it is time to refinance. If homeowners decide to sell their home and the home buyer orders an appraisal, the appraiser will have a hard time getting an appraiser to appraise the home for $1,000,000 if there are no comparable sales.
Do Not Over Improve Home
Homes that are unique and overpriced for the area will have a difficult time for an appraiser appraising them. These types of homes are called White Elephants. The only way they normally sell is from a cash buyer.
Homeowners will also run into problems refinancing it. Refinance mortgage loans require an appraisal. If an appraiser will have a hard time getting comparable sales to homes, owners will have a difficult problem refinancing a property. Homeowners who decide to do major home improvement to an existing home, it is fine as long as they do not over improve for the area. Having the best most expensive home in the area is never a good idea.
Borrowers who need to qualify for FHA 203k Loans with a mortgage company licensed in multiple states with no mortgage overlays, please contact us at Gustan Cho Associates at 800-900-8569. Or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
