Do You Need Private Mortgage Insurance?

Do You Need Private Mortgage Insurance?

Interested In Buying A Foreclosure? This Mortgage Could Be Just Right For You!

by Luke Fields

With the current real estate market favoring sellers, prospective buyers in many areas are facing difficulties in finding a move-in ready home that fits both their needs and their budget. With competition high for the best listings, many of which see offers within hours of being placed on the market, many buyers are left with choices that made up primarily of distressed or foreclosed homes, or those in need of updating or renovating to meet their needs.

Many popular mortgages have condition requirements

But as these buyers quickly learn, many of the most common home loans currently used require homes to meet condition and value guidelines before the loan can be approved. Because of this, buyer who had planned to use VA, standard FHA, USDA Rural Development or a standard conventional loan will likely not be able to move forward with purchasing a home that needs extensive work. If you are a prospective buyer facing this dilemma, you may not have heard of an FHA 203k home mortgage option that helps buyers purchase these less-than-perfect homes and then renovate them to fit their needs.

FHA 203k home loans combine the purchase and renovation into just one loan

The FHA 203k home mortgage may offer a real solution for buyers who want to purchase an imperfect home and renovate it. In fact, the 203k home loan offered by the Federal Housing Authority (FHA) allows buyers to use just one loan for both the purchase and renovation process, instead of trying to coordinate both a construction loan and a regular mortgage. This makes the process more streamlined and eliminates many of the concerns a buyer might have if the repairs or renovations take longer than expected.

Important facts about the FHA 203k home loan

To determine if the FHA 203k home loan would be a good fit for you, consider these important points:

  • borrowers may be able to include up to six months of temporary housing costs
  • the loan amount will include both the purchase price and the amount of money needed to renovate the home
  • all work must be bid and completed by properly qualified contractors
  • investors cannot use this loan, instead it is designed solely for owner-occupants and nonprofits
  • the property purchased can be up to four units, although condos and townhomes can also use this loan for interior renovations only
  • this type of loan is likely to take longer to complete the paperwork, due to obtaining bids from contractors and waiting for document approval from both the local lender and the FHA

To learn more about the FHA 203k home loan and get a better understanding of the type of home purchase it is best suited for, buyers should discuss the matter with their trusted real estate agent.


About Me

Do You Need Private Mortgage Insurance?

Welcome to my website. My name is Larry Silva, and I want to talk a bit about private mortgage insurance. You may have heard the term PMI mentioned when you were in the process of purchasing real estate. When I first heard my lender talking about PMI, I was very confused. It was my realtor who sat me down and explained what private mortgage insurance was and when someone is required to purchase it. He told me that PMI is not lifelong insurance; it can be cancelled when the mortgage principal balance reaches a certain point. Once it was explained to me, private mortgage insurance was no longer a mystery or a confusing concept. I would like to pass on what I learned and hope that you find it to be of value.