Mike Pfeffer of Fidelty and Trust Mortgage recently gave me some insight into a loan program that could be a perfect fit for some of the homebuyers here in Loudoun County. The program comes from section 203(k) of the FHA Insurance Program and is a Renovation Loan. Here is Mike's explanation of the program and his contact information in case you have any other questions.
The section 203(k) program is a little known piece of the FHA insurance program that was designed to allow borrowers to purchase or refinance and rehabilitate a property with one loan closing. The funds for renovations are fully dispersed at closing but often held in escrow (depending on the scope of work) and released as work is completed. This managed escrow dispersal helps ensure the timeliness and quality of the chosen contractors work. Renovation Loans are a great vehicle for borrowers to finance renovations and spread the cost out over 30 years, especially in a world in which home equity loans are increasingly difficult to obtain.
For borrowers - this is a common sense means to finance repairs/upgrades that can make your existing home look and feel like new, or put your personal touch on prospective purchases.
Renovation or rehabilitation loans are not well known but play an important role in the revitalization of neighborhoods. These loans have maximum loan limits based upon geography but will soon increase substantially (for example the newly released loan limit for the Washington, DC, metropolitan area is $729,750, up from $362,790). These new limits have not yet become fully accepted but they will shortly, and may only be available through the end of 2008. Since these new limits are temporary in nature, now is the time to research this option.
You can contact Mike directly at 703.967.0709 or email him at firstname.lastname@example.org