Flood Insurance
In the devastating aftermath of Hurricane Harvey, many are starting to look to rebuild. Some are finding that they don’t have adequate insurance, no flood insurance and in some cases no insurance at all.Insurance experts say that only 20% of homeowners in Harvey’s path of destruction have flood insurance.
This means that 80% of families with homes damaged by the hurricane will be left with more debt to repair or renovate their homes. Some may choose to sell their properties and others may be forced to leave their communities. If you are one of those hit by the flood, read on and find out what options are available to help you rebuild your home.
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I don’t have flood insurance, what are my options?
If your home was up for sale before the hurricane hit, or maybe you just bought a home, which sustained damage then you have two options available:• Your flood insurance policy• An FHA 203(k) rehab loanFor the 80% whose homes were damaged and who do not have flood insurance policies, getting an FHA 203(k) rehab loan also called a renovation loan may be just what is needed. With a renovation loan, taking your house down to the studs, taking out sheetrock, flooring, and cabinets to replace water damage is not a problem.
All of the devastation to the actual structure of the home can be repaired with a home renovation mortgage from FHA.In the past, buying a fixer-upper was difficult because most banks refuse to provide a mortgage on a property that is obviously in bad shape unless repairs have been completed. But today, home buyers can avoid this difficult position by purchasing properties and including the cost of renovations and improvements in one single loan. This will make it easier for properties hit by Hurricane Harvey to get renovated, repaired or put on the market as is.
What is an FHA 203(k) rehab loan and what are the benefits?
An FHA 203k rehab loan provides flexible home financing for purchasing or refinancing a home while also funding its repair and restoration. It’s an all-in-one financial package, issued as a single FHA insured loan and is used for home renovations of all types and sizes, whether for smaller repairs, or large home improvements. For those who plan to sell their properties, they can sell as is and the buyer can use the FHA 203k loan to buy and roll in the renovations.
The best loan product for Hurricane Harvey
The FHA 203k Rehab loan program is the right product for the right time. With the destruction caused by Hurricane Harvey, there is no better time.
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It will help you renovate, repair or refinance
The FHA 203k loan program can help Hurricane Harvey victims who don’t have flood insurance to purchase, renovate or refinance their properties.
The interest could all be tax deductible
The good news is that the interest on an FHA 203k loan qualifies for mortgage interest tax deductions like all other mortgage loans. Therefore, the interest that a borrower will pay on this loan could all be tax deductible. Some homeowners without flood insurance might apply for federal disaster relief benefits. But, unlike an FHA 203k which could all be tax deductible, this comes as a low-interest loan and can be a burden for people who are already struggling with too much debt.
Refinance and renovate with only one loan
With a renovation loan you refinance and renovate with one payment, one loan and a contractor of your choosing.
Change the look of your home
The FHA 203k loan program is a really good way of enhancing the look of your current property because it means that your property will actually be improved – not just purchased. Because of this improvement requirement, your property value will probably be increased.
Revive your community
In this time of need, the loan can help create jobs in communities hit by the flood as local contractors will get the opportunity to be part of rebuilding their communities.There are a lot of advantages of the FHA 203k loan, but quite simply, it can help rebuild and renovate communities hit by the flood.
We offer several options when it comes to renovation loans and if you want to buy or sell as is, or just refinance and renovate to get your house back to being a home once more, the FannieMae HomeStyle Renovation Loan, FHA 203k Standard or FHA 203k limited are available to help!
Standard 203k
The FHA 203k Standard loan is used for extensive renovations of over $35,000 like tearing down and rebuilding an inhabitable dwelling. As long as you retain the foundation. If you’re going to pull down and replace the entire structure—including the foundation—then you may need to get a different type of loan.
Limited 203k
The Limited 203(k) provides a smaller loan amount that’s up to $35,000 for modest improvements, upgrades, and renovations. There is no minimum requirement and the loan cannot be used for structural repairs. It is only intended for small projects like a bathroom remodeling, kitchen upgrade, etc.
The FannieMae HomeStyle Renovation Loan
We also offer the FannieMae HomeStyle Renovation loan, which allows borrowers carry out home improvements as part of a purchase or refinance loan.
It is a really great way for borrowers to make renovations or repairs of up to 50% of the appraised value of their property.
In order to be eligible for an FHA 203(k) rehab loan, you must meet certain criteria outlined by the Department of Housing and Urban Development (HUD).
These conditions include: owning a property that is in need of some cosmetic upgrade, finding a qualified lender, and meeting up with all their requirements like debt-to-income ratios, credit scores, and proof of income. Once your FHA 203k loan is approved, you will receive a closing date and an escrow account will be set up for the payments.
The repairs must begin within 30 days of the closing date and completed within six months. Using a qualified consultant will make the process faster and seamless.
At a time like this, most people just want to move on with their lives and get things back to normal. An FHA 203k cannot make up for all your losses, but it can give you and your loved ones a fresh start.