Clark Howard: Rehab loans
JACKSONVILLE, Fla. -- Donovan Dillard is renovating this bungalow he bought in Adair Park. It has come a long way. "This was where the kitchen sink, stove, cabinets, countertops," Donovan Dillard said. He bought the home for just $70,000, but it needed a lot of work. Dillard applied for an additional $20,000 loan through the federal housing authority's 203K rehab loan. It's a little-known loan offered by HUD that allows the purchaser to roll the cost of repairs and upgrades into the total cost of the loan.
"All of our loans must be used by owner-occupied buyers," Dillard said.
Debra Robinson, with the U.S. Department of Housing and Urban Development, said in order to qualify, the owner typically is required to live in the property for at least 12 months. We spoke to her inside the home of one of Dillard's neighbors, who also used a 203K loan. He made a formerly abandoned house a livable home. A 203K doesn't have to be used for just major
repairs."It may be that the borrower just wants to do some minor upgrading, to make a property the way they want it," Robinson said. "They may want to change out the flooring or they may want to add in a washer and dryer."
Another requirement was that Dillard had to use FHA-approved consultants to work with his lender. Robinson also suggests home buyer training before purchasing a home."We want them to be successful, we want them to keep their houses," Robinson said. "We want them before they go into it to understand what they're getting into."There are millions of distressed properties around the country in need of some major TLC. If you're looking to buy one of these homes, go to Hud.gov to learn about which lenders are giving out 203K rehab loans.You can also look for local and state incentive programs that may give you assistance to help put money toward the down payment of your home.
For more information, go to ClarkHoward.com.
Watch Clark Howard weekday mornings on Action News This Morning on FOX30 beginning at 7 a.m.
Copyright 2013 Cox Media Group, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.