Home Improvement Loan Tips 2

203k

1. If you want to purchase a home that is in need of repair, and you plan to live in the home right away, you will need to get a special loan called a 203k. This loan will pay off the seller and put estimated repair funds into an escrow account, where it will be doled out to the contractors a little at a time until the work is complete. The FHA-backed loan amount is based on the purchase price of the house, plus the estimated costs of repairs or renovations. Because it is federally insured and backed, lenders do not require that the property be repaired and inspected before the closing date of the loan, which is overseen by the federal Housing and Urban Development agency (HUD).
   Contact your local bank or mortgage broker to request information on the HUD 203k home repair loan.