How Can You Use an FHA 203(k) Loan?

If you don’t want to pay any out-of-pocket expenses to make repairs on a house you’re interested in buying, the FHA 203(k) loan might be perfect for you.

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Every once in awhile, I come across a buyer who’s interested in a property that needs some remodeling or retrofitting, but the buyer doesn’t want to have any out-of-pocket expenses.

In this type of situation, using an FHA 203(k) loan is one of your best options. There are other programs available at Loan Depot that can take care of repair issues, but the FHA 203(k) is the most popular.

This loan can help you make your next house perfect.

There are two types of 203(k) loans. The first is the streamlined version, which goes up to $35,000. This amount can cover a bad roof, a faulty furnace or air conditioning unit, and any required light updates around the kitchen and bathroom areas. The second is the regular 203(k) loan, which can go all the way up to the maximum limit if you need to do a complete remodel. The key thing to remember is you still have to use part of the existing structure.

The down payment for the buyer is the same as a regular FHA loan—3.5%. Interest rates are typically higher with the 203(k) loan, though, because it’s a rehab loan.

You’ll never find the perfect house, but this loan can help you make your next house perfect. If you have any questions about this topic or are thinking about buying or selling a home in our Chicagoland market, please feel free to give us a call. We look forward to speaking with you.

What's Involved in the Closing Process?

Buyers and sellers alike are often confused about the details of the closing process. Here is a step-by-step guide of what to expect.

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One of the most common questions we get from both buyers and sellers once a contract has been accepted is: “What does the closing process look like?”

Once a contract has been executed, the first thing that happens is the home inspection. Buyers hire a professional inspector to examine the home and while this is happening, the loan application is also in the works. This happens following pre-approval.

The application is held off until the results of the home inspection come through but once they do, then comes an appraisal order.

After the appraisal comes back to value with no required repairs, the underwriting process begins.

At that point, they’ll sign off on the loan and we’ll issue a clear-to-close. Assuming everything goes as planned, this process takes about 30 days from the time the contract hits to the time you actually close.

The next step is for a real estate broker to perform a final walk-through with the buyer to ensure that the property is in an agreed-upon condition.

This process takes about 30 days from the time the contract hits to the time you actually close.

After this comes closing. Here in Illinois, many buyers use an attorney who will go through all the loan papers, mortgage, and other documents to make sure things are in order so that the title officer can disperse out on the transaction.

Finally, the seller is paid. This is also the point where a seller will receive a check in the event that they’ve overpaid.

If you have any other questions or would like more information, feel free to contact us by sending an email or giving us a call. We look forward to hearing from you soon.