RE/MAX Logo

orly chen – bergen county's premier real estate agent

O: 201.567.9191  /  C: 201.803.9611
orlychen.com a personal real estate experience why move to bergen county bergen county real estate listings news and media in bergen county bergen county resources contact orly chen

“Deemed the “fixer upper loan” by some, the 203(k) mortgage is a special mortgage
that is available to buyers of homes that need work in order to become habitable."

What Is the 203(k) Mortgage?

Though many prospective homeowners are familiar with the way that straightforward mortgages work, very few are aware of a slightly different kind of mortgage that is available to some homes. Deemed the “fixer upper loan” by some, the 203(k) mortgage is a special mortgage that is available to buyers of homes that need work in order to become habitable.

Many homeowners who would desire a home that needs a great deal of work - either to the general structure of the home, its location, or its placement on a particular plot of land - avoid the purchase because they don’t have the funds to purchase the home plus fix it up. The 203(k) mortgage offers a solution to this problem by loaning the buyer the funds it will take to fix up the home while also allowing them to purchase the home.

The mortgage is determined by calculating the price of what the home will be worth once the updates and repairs are made, rather than relying on the listing price. Some consider it risky business because it means taking on a mortgage that is worth more than the house is in its present form. However, for the dedicated home buyer who is going to make the necessary changes, the 203(k) mortgage can be a great opportunity.

The 203(k) mortgage was established in the 1970’s when the federal government was looking for a way to rehabilitate distressed neighborhoods. Today, the loans are given by private lenders but are insured by the Federal Housing Administration.

In addition to being a tool in fixing up a home that is a new purchase for an individual, 203(k) mortgages can also be used to repair or update an individual’s current residence. Updates such as new windows or a new roof could qualify for a 203(k) financing. The minimum loan amount available under 203(k) mortgages is $5000.

The way the 203(k) loan works is similar in process to the way a construction loan works. Essentially, the loan is placed in escrow for a contractor. As the contractor completes the necessary work, he or she is paid through the escrow account. The types of repairs that are necessary and are funded by a 203(k) mortgage are determined by an appraiser, who identifies the needs of the home in order to be habitable and in order to increase the value of the home.

Many individuals - and even many real estate agents - are not aware that 203(k) loans are available. It’s important for would-be home buyers to realize that these types of loans exist, as their existence brings about a great deal of potential opportunity for home buyers. Even if a home is not in the shape it would need to be for an individual to move into it, the house is not necessarily totally out of the question. This is great news for decaying cities that are in need of upgrades and renovation but do not have developers who are willing to come in and do the necessary work.
 

RE/MAX of Tenafly

                    RE/MAX Associates lead agents
                     of competing companies in
                    professional designations which
                 denote specialized training and
               education. They dominate the Accredited Buyer Representative (ABR), Certified Relocation Professional (CRP), Certified Residential Specialist (CRS) and Leadership Training Graduate (LTG) ranks. Read more...

About Orly Chen

  Orly Chen is a leading
Tenafly real estate agent
in Northern New Jersey
specializing in the Bergen
County area. Her
outgoing personality,
honesty and
approachability and
integrity make Orly
one of the most sought-
after agents in the
Northern New Jersey
real estate market

Read more...
 
You are here: Homepage  /  News and Media  /  Related Articles  /  What Is the 203(k) Mortgage? Sitemap  
  A Personal Experience
About Orly Chen
Why Orly
Remax
  Why Bergen County
Communities
School Systems
Commute
Stuff to do
Shoppig
Demographics
  Listings
Featured Listings
Search Listings
Recently Sold
  News & Media
Related Articles
In the Press
Social Media
Events
Open Houses
Testimonials
Newsletter
  Additional Resources
Looking to Buy
Preparing to Sell
Closing Costs
Home Inspections
Mortgages
FAQs
Business Partners
  Contact Orly
Contact Info
Location
Availability
 
Orly Chen 2015 © All Rights Reserved Web Design, Development & Seo by Graphic Advance