25 June 2012

Qualifying for rehab loans requires a few points to be considered

You're certainly going to go looking for funds to ensure you become debt free. No matter what debt relief option you choose, even the safest ones like debt settlement are going to require funds. This is where you'll have the necessity of the Federal Housing Administration (FHA) Rehab loans also known as 203(k) loans. As the name suggests, these loans are given out by the Federal Housing Administration, under the U.S. Department of Housing and Urban Development.
The very reason behind starting this article with debt issues is nothing but the fact that these loans are meant to address the problems of millions of borrowers buried under the burden of debt. Properties that are badly in need of rehab are used as securities against these loans. These loans come with strict restrictions and that makes it really a challenging task to qualify for these loans. The following will tell you how you can qualify for rehab loans:
  • Eligible property - It is important that you're in possession of an eligible property. In other words, the property that you're going to take out the rehab loan against has to be a year old post completion. This is to ensure that rehab loans are not construction loans and is to be used on properties that have already been completed.
  • Restrictions - Try to be mindful of the condo restrictions while taking out condo 203(k) loans. There are guidelines such as owner occupation instead of rental units, interior improvements, and rehab mortgage balance to be under the value of the condo.
  • Reasons - Try to point out the reasons behind taking out the loan. You're very likely to qualify if you're looking to get the rehab loan in order to meet the energy efficiency standards. Well, you're not allowed to make cosmetic improvements with this loan. Improvements in system appliances are allowed.
  • Mortgage value - There are certain limitations on the mortgage value. There is no way a 203(k) rehab loan can be higher than the present mortgage as well as the rehab and closing costs on the refinance. It can't also be higher than the appraised value when added to the rehab cost. The determination of the values can be easily done once the loan process gets underway.
  • Rehab loan - You must understand the rehab loan, that is to say, the things that can be done using the loan. Some of the most common activities that can be done with the help of the rehab loan include: getting the construction equipments, supplies, labor, application fees and construction permits. You're also allowed to include the licenses for architects and inspectors as well as other fees that might need paying. Expenses on meals transport and insurance can't be included in the rehab loan.
The point is to make the best use of the rehab loan by doing whatever that is included in the loan. This will help you make the necessary rehab work on the property as well as raise its market value to respectable standards and put you on the winning side.For more information visit http://www.debtconsolidationcare.com/debt-settlement.html

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