The recent housing collapse has many people who were considering buying a home feeling a little uneasy. There are many questions on the minds of would-be homeowners.
If you are one of these many people, you may be wondering if the market is right for you, if you can afford to own your own home, and how you go about it without sacrificing everything. The good news is that the market is perfect for first time buyers and that there are options even if you don't have a tremendous amount of money for a down payment.
I Can't Afford to Own My Own Home
This is a common belief held by many renters or other potential homeowners. First, you probably think you need to have a huge amount of money just sitting in your bank as a down payment before you can even think of owning a home.
In today's economy, setting aside tens of thousands of dollars for a big down payment can seem like an unconquerable obstacle for a first time buyer. After that, you would have no money left over to renovate, buy all appliances you need, or even have a safety cushion in case of an emergency.
Prior to the 203K renovation loan, you would have to pay for all of your needed renovations right out of pocket. Fortunately, there is an option for you that you may not know about.
The Advantage of the 203K Loan
FHA insured 203K renovation loans are designed especially for first time home buyers who don't feel as though they can afford the costs associated with a home that needs repairs. You may already have considered distressed homes listed as foreclosures at a local bank.
These homes are ideal for a first time buyer, and a 203K loan is ideal for these kinds of homes. What a 203K allows you to do is wrap up the mortgage from a distressed home and all the renovation costs into one affordable package. The initial down payment is incredibly low and the interest rates are historically low.
With one of these loans, you can afford a distressed house from a bank foreclosure which will typically be had for substantially less than a renovated house since the bank will want to unload it quickly. You will also be able to use the loan to pay for certain renovations without incurring a huge out of pocket expense.
Find an Experienced Realtor and Lender
You will want to discuss the 203K option with your real estate agent if you have one and if you don't you will want to consider multiple lending agencies or loan officers before you make your decision. If you decide that a 203K is right for you, you can begin looking at properties to assess what the initial costs will be and how much renovation they will need.
If you are able to find a distressed home in a neighborhood you like, you can get it for well below market value and spend the money you save on renovations. In the end, even someone with little money to put down can turn a foreclosed distressed home into the home of their dreams.
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