How Government Can Help You When Buying Fixer-Upper Homes

Let us say that after you drove around a neighborhood visiting some beautiful Destin real estate properties and Destin homes for sale, you realized that their selling values are too high that your budget cannot handle it. You opened this problem to your agent and he or she suggested that you try investing in a fixer-upper property, which sounded a pretty good idea for you because they are relatively more affordable. But if you are going to purchase a property that needs a huge repair and improvement work, a lending company may not give you the loan money until you have made all the repairs. Because of this, you need to purchase the house first before you can renovate it and you do not have enough savings to finance a new home. Many people will already give up this American dream of homeownership because they lack the financing capacity but you should not be because there are lots of options out there. You should stay optimistic that you can be a homeowner because there is a clever solution for this dilemma. Why not getting help from the government sector?

The Department of Housing and Urban Development (HUD) can be a huge help for you because they have different mortgage programs for the eligible citizens of US. One of these loan programs is for those interested home buyers planning to get a fixer-upper property. This loan is referred to as HUD's 203k loan. It lets you buy a home that is currently not in a good condition and included in the loan money you are getting is the budget you will need for the renovation and improvement you want to make to the house. The 203k loan will be insured by the Federal Housing Authority and it is given through all the eligible mortgage lenders around the country. You only have to prepare 3.5 percent of the value of the value of the house plus the expenses for the down payment. If you are interested to apply for a 203k loan, here are the things to do:

1. Look for a fixer-upper property and then make your purchase offer agreement. The contract you will be making should state that the buyer will use a 203k loan and will follow a contingency plan.

2. Find a mortgage company offering a 203k loan, that should be approved by the FHA and then talk the details about your proposal. Show the loan officer that entire scope of the repair work you are planning and include there the estimated expenses for the repair and renovation.

3. Wait for the lending company to arrange appraisal process so they can determine the real market value of the property after it gets renovated according to your proposal.

4. Your loan will be approved after passing all the requirements for the loan application and the mortgage company did not see any troubles and errors in your application. The total amount of the mortgage you will be getting will cover the price value of the house plus its repair expenses. Part of the loan, as well, are the allowable closing cost and a contingency reserve for the property which needs to be at least 10 to 20 percent of the total repair and renovation costs estimated.

5. During the closing stage, your house will be paid off and the remaining loan money to be used for the home's repair and improvement will go to escrow.

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