The process of using a 203k loan

Ready to try your hand at renovating a home? There’s a loan to help with that.

The best candidates for a 203k loan are ones who don’t have a lot of extra cash in the bank and want to buy a home that needs to be renovated. Homes that need renovating will cost much less, and the 203k loan can pay for the improvements.

Get Started with a 203k Loan

If you think a 203k loan seems like it would be a sound financing option for you, talk to a mortgage professional. They can answer your questions. The lender will let you know how much of a home you can afford, and then you can work with a real estate agent to find one that meets the standards for the loan.

Once you choose a home you would like to purchase and renovate, you’ll need to select a contractor to assess the house. This contractor needs to be approved by the bank you’re using for the 203k loan. Make sure you tell the contractor exactly what you would like done, so they can come up with an accurate quote for the total renovation cost. The quote is then sent to the bank’s underwriting team, who will review and approve it if it meets their standards. The money for the renovations is held in an escrow account. As the contractor finishes milestones outlined on the contract, money is withdrawn to pay them.

Keep in mind that this type of loan is not for adding luxury finishes. This loan is for needed renovations. This is important, as it can be discouraging to find a home you feel needs to be renovated, but it does not meet the guidelines of the lender.

For more information on how you can take advantage of a 203k loan, contact us today. It may be the best way for you to get the home of your dreams within your budget.