Refinancing and FHA 203(k) Loans
The FHA 203(k) loan program offers some pretty important benefits to anyone looking to purchase a fixer-upper, but it is also an attractive option for existing homeowners who need to repair their home and want to take advantage of improved credit scores, or changes in the national interest rate. For these homeowners, refinancing into an FHA loan could be a good idea. What should you know?
Conventional Loans: If you have a conventional mortgage loan and want to reduce your interest rate while also getting the money necessary to make repairs or renovations, refinancing into a 203(k) loan is possible.
Other FHA Loans: If you have another type of FHA loan, such as a 203(b) loan, it is possible to refinance into a 203(k) loan to take advantage of changes to your credit, or the market, but also to get funds for repairs and renovations.
What are the benefits of refinancing into a 203(k) loan? Actually, there are quite a few, including the following:
Additional Funding: With most refinancing options, you’re just refinancing the mortgage itself. That can result in financial savings over the life of the loan, but you’re still on your own when it comes to paying for home renovations. With a 203(k) loan refinance, you get all your funds in a single loan.
No Need for Additional Debt: The average American family struggles with six figures worth of credit card debt alone, not counting things like a home mortgage, car payments, or school loan payments. By refinancing into a 203(k) loan, you are able to make repairs and improvements to your home without putting yet more money on a credit card, taking out a potentially costly home equity line of credit, or going deeper in debt in other ways.