The Title 1 loan is an option for those buying a fixer-upper. However,
this particular loan doesn't include the price of the mortgage. The FHA
insurance loans up to $25,000 to be used to make non luxury renovation and repairs
to a home. The payback period can be as long as twenty years. Interest charge
might be higher that with home-equity loans. But it is generally lower that a
home improvement loan from a commercial lender , and the interest is tax
deductible.
Below are the advantage of the Title 1 program:
1. You don't have to live in any particular area to secure one of these
loans.
2. you seldom need any security for loans under $75,00, other than your
signature on a note, and you don't need a cosigner.
3. Yu only need to own the property or have a long term lease on it, fill out
a loan application that shows you are a good credit risk, and execute a note
agreeing to repay the loan.
4. You don't have to disturb any mortgage or deed of trust you have on your
home.
5. Your loan can cover architectural and engineering costs, building permit
fees, title examination, costs, apprasial fees, and inspection fees.
In general, to fix-uppers buyer, the Title 1 loan is a good option to look
for.
Another option for fix-upper buyers is FHA program or 203(k) loan.
This plan enables you to borrow both the sale price for the house and its renovation loan. The loan amount of offered is based on the estimated post refurbishment value of the house.
The maximum amount you can borrow for renovations is subject to FHA lending guidelines set for your particular geographic area. Financing is based on an estimate of the value of the home after renovations. The loan is then given for the amount of the house and repair cost. Interest rate may be a little higher than conventional mortgage rate, but they are normally lower than a conventional renovation loans. There is a minimum of $5,000, but generally, almost all fixer-uppers will meet the repair quota. The money can be spent on paint, sold and appliances.
