construction loan

Better Know Your Loans: What is a 203K Loan?

If you’re the type of person whose imagination sees a house for a what it can be in the future, not always for what it is today, then perhaps a 203K loan is a fit for you.

A 203k loan from your mortgage lender opens up the door for you to snatch up a home in need of work, usually for a lower price (although admittedly there’s a chance you’ll be competing with cash buyers/contractors), work in the modifications to your home on the front end, and build it out exactly to your liking.

There are some contingencies to this type of loan, including but not limited to the fact you will need to work with contractors approved by the FHA. Additionally, given the significance of the work at hand, in all likelihood you won’t be able to live in the home during this time. However, if you’re in a position where you’re renting month-to-month, or can afford to spend a few months with family/friend, talk to a mortgage lender today to discuss ways a 203k loan can work for you.

When done right, a 203k can help you build out the home you want for close to the same price of the move-in ready one selling in the same town without having to pay a premium.

Need recommendations on mortgage lenders? Feel free to reach out and I’d be happy to put you in touch.

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