FHA 203k Construction & Remodeling Loans

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“”Until recently, borrowing money for a new kitchen, second-story addition, or other home improvement meant going to the bank, seeing a loan officer, and hoping for the best. Today, however, you have many more options. A mortgage broker, for example, can offer more than 200 different loan programs. And brokers are just one of the many lenders eager to put together a loan that fits your situation - even if your credit history is less than perfect”

This was written about two years ago on a blog I was recently researching. I thought the point would come in handy when talking to you about the state of lending currently in America. Lets take it point by point -

“”going to the bank, seeing a loan officer, and hoping for the best”" . Today there is no reason for visiting the bank unless you have spotless credit and 10% to put down on a new home, you wouldn’t even get to the “hoping for the best” stage before they stuck a fork in you. I heard someone on an interview last night ask, “the economy has messed up my credit, can I still buy a home?” . Folks, those days have fallen by the wayside, today’s situation now says, you have to earn the privilege of owning a home. It isn’t a right bestowed upon every American, it is a reward for hard work and doing right.
“”you have more options, mortgage brokers can offer more than 200 different loan programs”" . Wow, I remember the days that we had to stay up-to-date with all the new programs coming out, it was so crazy. They had a new program for every different situation, didn’t pay your bills, the programs said -”thats ok, here is a loan at 13% interest and it allows you to have that house at 55% debt-to-income, oh and by the way, it adjusts in one year to over 18%. DON’T WORRY ABOUT IT!” Well the fact today is that there aren’t 200 different loan programs, there are just a handful and you have to prove your income and your assets, and you can’t have a debt-to-income ratio like the 55% variety available just a couple years ago.
” lenders eager to put together a loan that fits your situation - even if your credit history is less than perfect. ” . Lets start with the eager lenders, there were so many loans being done during the last 10 years and lenders couldn’t do them fast enough, in many places it wasn’t about the customer and the long term implications of the loan they were selling, it was about their eagerness to make everyone a loan. Today there is an about face happening, if your credit is less than perfect, you will be told NO, if your DTI is too high, NO, if you can prove your income, NO LOAN FOR YOU! You will have to show more responsibility managing your credit and money situation if you want to purchase a home, banks aren’t inventing new programs for every situation.

What a drag! Well even though we are in tough times there is still money to lend for remodeling, purchases, and refinances. Actually the government is helping with the FHA programs, the 203k is one of my favorites. While the low credit score for an FHA loan is at 620 they have many options if you have slight credit issues and they allow you to provide explanations for some situations. I hope this helps you to understand how the loan landscape has changed. When going for a loan be knowledgeable and prepared.

Eric Storm
803-517-8791