Since working with HUD Homes, I found out about a neat program that allows homeowners to finance the cost of their repairs into their home loan. It is called a Rehab loan.
FHA offers 203(k) financing or also know as a "Rehab loan" enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan.<!-- <cfoutput> --><!-- </cfoutput> --> The repair amount cannot exceed $35k and must be at least $5k. It can be used for single family dwellings or 1-4 unit dwellings.
Repairs can range from structural damage to updating kitchen and baths. Cosmetic rapairs alone will not qualify for this program.
The advantages for this program is that it allows homeowners to purchase a foreclosure that needs work and they won't have to use their cash to complete the repairs. Some disadvantages are that some lenders aren't experienced with Rehab loans because it could take up to 60 days for them to get paid.
If you are a homeowner thinking about purchasing a foreclosure, don't let the need for repairs scare you away. You have options!