Many borrowers in Clarendon County, SC who plan on buying a fixer-upper discover that it can be challenging to find financing, as lenders typically do not want to make a mortgage on a property that is uninhabitable.
One popular way to buy a fixer-upper is an FHA 203(k) loan, which allows you to borrow money for home improvement and home purchase in the same loan. These loans, often used to revitalize neighborhoods, are offered through the Federal Housing Administration (FHA) to encourage lenders to provide money for purchases that may seem risky.
The FHA 203k has two parts - A portion of the loan amount is for the purchase of the home or the payoff of the existing mortgage to be paid off; PLUS, the cost of renovation including inspections, permits, etc. The maximum loan amount is the lesser of the current or as-is value of the home, or 110% of the home’s estimated value after renovation work. he timeframe for the renovation work is a maximum of 6 months.
There are two types of 203K Loan; 1) FHA 203(k) Streamline limits the financeable repair related costs to $35,000; 2) FHA 203(k) Regular allows the renovation cost to be financed based on the Subject to renovation Appraised Value.
The FHA 203(k) loan is available as a fixed rate, with a 15-year or 30-year term. While rates will be a bit higher than a regular FHA loan, the renovation loan option is often the best way to buy a fixer-upper.
To qualify for an FHA 203(k) loan, you must plan to live in the home in Clarendon County, SC as your primary residence. The home can have necessary structural repairs for a regular loan, or just non-structural repairs for the Streamlined 203(k) loan. The following properties can qualify:
The FHA has rules about which types of repairs can be covered by a 203(k) loan, and the lender in Clarendon County, SC may also allow or disallow certain repairs. Allowable repairs under an FHA 203(k) mortgage include:
You can include the cost of labor in your loan, even if you plan to do the work yourself. Be aware that repair work must be finished within six months of getting the loan!
The greatest benefit of a 203(k) mortgage is you can buy a home in Clarendon County, SC that needs repairs that you could otherwise not afford. FHA 203(k) home loans usually have low down payment requirements, as well as competitive interest rates.