Renovation Refinancing
FHA 203k Refinance Loan For Existing Homeowners
FHA 203k loan is not just for purchase transactions. Homeowners can consolidate their existing mortgage loan(s) and the cost of the home renovation project into one new loan up to 97.75% of the “after-completed” value of the house. The “after-completed” value of the house is the anticipated value of the house that takes into consideration all of the improvements that will be made to the house through the FHA 203k refinance loan renovation project. By using the “after-completed” value of the house homeowners will be eligible for a larger renovation budget than offered through a traditional mortgage loan or Home Equity Line of Credit.
Traditional loan programs will use the house value without any consideration for anticipated improvements to establish the maximum loan to value ratio (LTV). Based on today’s ultra-conservative lending standards the maximum LTV allowed for a “cash-out” financing transaction based on the major loans programs currently available are as follows:
- Conforming/Conventional: 85% LTV
- FHA: 85% LTV
- VA: 90% LTV
- Home Equity Line of Credit: 80% of the Combined LTV, which includes the existing first trust mortgage
The FHA 203k refinance loan program allows the homeowner to borrow 97.75% of the after completed value to make improvements to the property. Thus, the FHA 203k refinance loan offers homeowners the greatest borrowing capacity of any loan program that is currently available.
Benefits to the FHA 203k refinance loan program extend beyond having the highest LTV of any current available loan program. Other benefits include:
- No high interest rates like credit cards
- No appraisal deficiency related challenges. If the Appraiser identifies any problems, that deficiency can be included into the renovation project. This differs from all other loan programs which would require that the deficiency be repaired prior to settlement
- Stable 30 year fixed interest rate or adjustable rate option for greater borrower power
- All closing costs can be rolled into the new loan allowing the homeowner to not have to bring any cash to settlement
- Minimum credit score of 640 is the least restrictive credit score required of all major loan programs
For the House that is Almost Perfect, we have the Perfect Solution.
A Mortgage & Home Improvement Loan
All In One | Purchase or Refinance
Eligible Renovations
- Remodel the kitchen or bath
- Renovate or add a room
- Paint the house or add siding
- Add a porch, deck, or patio
- Replace a leaky roof
- Put in new flooring, carpeting, or tiling
- Conserve energy with new windows
- Swimming Pool
- Landscaping
- Dormers
- Outdoor Kitchen and/or Fireplace
- Built-in Spa
- Major structural alteration
- & More… Talk with a Licensed Loan Officer
FHA 203k Loan Requirements Eligible Properties
1.
Get Pre-Approved
This is the time to get in the know. A pre-approval will give you an advantage when you find your perfect home. We can tell you what you need to get pre-approved, so you know the exact loan amount you qualify for, what your monthly payment will look like, and how much taxes and insurance will be. With a pre-approval, the loan process will be smoother and your offer will be stronger.
2.
Loan Application
Your application will provide a complete picture to loan investors of your assets, debts and what you are buying. It will take into account documents such as pay stubs, proof of income, tax returns, employment history, and information on all debts, assets, and sources for down payments. Don’t worry, we will request these documents as applicable for your loan application so that you can be fully prepared.
3.
Select Your Loan Program
Fixed rate? Adjustable? FHA? There are multiple loan options that may fit your unique needs, and we can help you choose. Are you looking for the consistent rates and payments that a fixed rate loan can provide? Do you want the short-term benefits of lower rates that an adjustable rate loan can bring? Our extensive portfolio of loan options means you have more options available to get just what you need.
4.
Processing and Underwriting
Your loan has specific investor guidelines that must be met, and an underwriter will review your documents to be sure that you meet them. While an underwriter reviews your file, an appraisal will be ordered on the home. Additional information may be requested, so don’t panic if you have to turn in more documents. That’s just the underwriter working hard to get your final approval.
5.
Loan Approval
Before your loan is approved, you will receive pre-approval and a list of closing conditions that need to be met. These conditions can include verification that your employer is current and proof that homeowner’s insurance has been obtained. Once closing conditions have been satisfied, the underwriter issues a clear to close. Congratulations, your loan has been approved!
6.
Close the Loan
With an approved loan, you are on the home-stretch towards closing. The lender will send closing documents to a title company that draws up paperwork and arranges for signing of documents. Once the documents have been signed and funding conditions have been met, the title is recorded and the process is complete. You are a proud owner of your new home, and the keys are yours!
