As a 1st home buyer, searching for the right home within Southern California market offers a long list of home characteristics to consider. For example, one such question is ‘are you looking to purchase a condo or single family residence?’ Another question many 1st home buyers are finding themselves considering is if they should buy a home that is in either in need of repairs or is in mint condition? The price for both can be a substantial difference.
During one’s search, home prices for ‘fixer uppers’ versus ‘turn key’ homes can be either make or break a 1st home buyers ability to qualify. Being open to purchase a home in need of repairs in any of the Orange County, Los Angeles, or Ventura areas has a lot of big benefits in financial gain, as long as you are willing to put in the time and care into the home. If you are, you can save a lot of money in various areas of the home’s long term expenses and be able to get ahead by building equity once the repairs are made.
As an FHA 1st time home buyer, one FHA loan program currently available and designed to help cover needed repairs in homes is a FHA 203(k) loan. The U.S Federal Housing Administration (FHA), a department operated by the Department of Housing and Urban Development (HUD), works to aid in buyers across the board by guaranteeing approved loans made by other lenders that fall within their set of FHA guidelines. Amongst many of the programs offered, FHA created the Section 203(k) program to provide home buyers and owners with a tool targeted to improve neighborhoods and community revitalization, as well as, open opportunities for homeownership to others in need of a purchasing opportunity.
To help further understand what a 203(k) loan is and how can help 1st home buyers through the opportunities it provides, here are a few key points to know about the FHA 203(k) loan program:
FHA 203(k) and 1st home buyers |
• Homes on the market and in need of repairs often are listed at a lower than their potential price.
• With large amounts of homes in foreclosure, the foreclosure process can often take some time. With no homeowner caring for the home, its’ condition often falls below its’ neighborhood worth.
• This provides opportunities for 1st home buyers to purchase a home below the market and qualifying for a 203(k) FHA loan to later make the repairs; thus bringing up the home value and equity for the new home owner
Types of properties available in FHA 203(k) loans in Orange County, Los Angeles, and Ventura |
• Single-family residences
• One-to-four unit properties
FHA 203(k) includes wide range of repairs approved |
• Elimination of health and safety hazards
• Changes to aesthetic appeal and elimination of obsolescence
o New exterior siding
o Home additions (i.e. second story, covered porch, stair railings, attached garage/carport)
o Energy conservation
o Accessibility and home functionality for disabled people
o Labor, designs, and materials needed for damage improvements (i.e. water damage, fire, etc)
• Mortgage payment coverage up to 6 months during construction/home repairs
Overall, an FHA 203(k) loan allows 1st home buyers to benefit from qualifying for a FHA loan program which provides low interest rates, lower down payments, and higher mortgage home loan amounts, while providing aid in making home improvements that enhance home appearance and quality that puts equity back into the home. With many gains to be received by any FHA 1st time home buyer, before making an offer on a home, review this program with your lender and research the homes in your ideal market…you may find your diamond in the rough.
Visit next week’s post for Part 2 of How FHA 203(K) Loan Benefits 1st Home Buyers and learn more about this FHA loan program and steps for as a FHA 1st time home buyer on how to attain this type of loan for you and your family.