Are you one of the many Americans dreaming of having their own home? Have you knocked on every bank door for a housing loan, only to be turned down? Are you willing to put in the effort on a fixer-upper, but you can’t afford to both buy and renovate it? Then consider applying for an FHA 203k loan. The FHA 203k loan is a government-backed mortgage specifically designed to help people like you turn old properties into your dream home.
Here’s how you can maximize your chances of getting approved.
Research, Research, Research!
You have to do your homework first. Don’t get tunnel-visioned onto any property because you will need a ballpark estimate of how much the renovations will be. One house might, on the surface, seem like a steal but is actually an endless pit of repairs and problems. If you’re not careful, you could wind up blowing your whole loan away before you know it. Hire a 203k consultant. They have years of experience and training to help you sort out a good deal from a bad one.
You should also look into getting a licensed contractor who has a good reputation. They’ll be able to help you make a detailed budget for your loan application. This will ensure the whole process will go over smoothly. Don’t jump for the cheapest one, as this will result in work of poor quality.
Find the Right Loan Originator for You
The siren call of renovation rings so loudly, you may be tempted to say yes to the first Mortgage Loan Originator (MLO) you meet with. You must resist! Shop around until you find someone you can confidently entrust the future of your home with. An experienced MLO can save you thousands of dollars.
Negotiate the Value of the Property
Now that you’ve set your eyes on the prize, it’s time to name your price. Understandably, this can be rather intimidating, especially if you have little to no experience in real estate. This is why the first tip is to arm yourself with research, a contractor, and a consultant. Have them accompany you to the site and listen to their expertise. Go with your gut, and do not get cowed into a bad deal. Remember that the property in question is damaged, so you shouldn’t pay full price for it. Consider the labor and time you’ll have to put in to make it yours while negotiating the final price.
Be a Good Team Player
This last tip might sound out of place, but remember that you’re not the only one looking to close this deal. You have the lender, contractor, and consultant working with you. Be a team player and work hard to actively communicate between all members of the party to ensure a smooth transaction.
There’s an abundance of empty houses all across America just waiting for someone to call it home. All they need is some love and a little bit of elbow grease. Armed with these tips, one of those homes could soon be yours.
Are you looking to apply for an FHA loan? Reach out to ACB Mortgage Solutions today! We’re a brokerage firm for residential clients as well as business investors.