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Hurricane Irma Aftermath: 3 Types of Mortgages You NEED To Know About

It’s been almost 3 weeks since Hurricane Irma roared into the Florida Keys leaving lots of devastation behind.  We in The Keys have a long way to go for our recovery and housing needs are certainly a top priority.  There are a couple of mortgage options that I want to be sure that people are aware of for both purchase and refinancing:  FHA 203(h), Repair Loans, and Rehab Loans.

 

FHA 203(h):

This loan program is for those that lost their home or space they rented due to Hurricane Irma.  FHA is offering a 0% down FHA Disaster purchase loan.  To qualify you will need to prove that the buyer’s prior living area is non-livable.  The seller can pay their closing costs (if written in the contract that way), or the buyer can pay those on their own.

Here’s a snapshot of the program:

FHA Mortgage Loans for Disaster Victims (Section 203(h)

Summary:
The program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Purpose:
Through Section 203(h), the Federal Government helps victims in Presidentially designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners.

Type of Assistance:
Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner. One to Four Family Homes.

This makes recovery from a disaster easier for homeowners:
No downpayment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing or by the seller, subject to a 6 percent limitation on seller concessions.

The Fine Print:  https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ins/203h-dft

Repair Loans: 

This is for the buyer that wants to purchase a home that is slightly in disarray, but not repaired yet. The seller CAN put up to $15,000 in “repair escrow” reserves at closing for the repair items that the house needs. Buyers can follow through on buying and not be held up on closing until things are completed this way. It is a bit of extra paperwork of course, but it’s nice because with contractors backed up on roof work, etc. this can help closings to keep moving. The buyer can buy and seller can move forward. (This is for conventional, VA or FHA loans).

 

Rehab Loans: 

This can be used for a buyer that wants to buy a home with more significant damage (than $15,000) AND can help current homeowners to refinance that need help financing repairs. These loans are much more paper intensive and require contractor quotes, references, license and insurance info, etc. but they are wonderful tools for properties that need a lot of love right now.

Please contact me if you have any questions or would like to start your home search.  You can also visit my Recommended Lenders for additional information and to discuss your financing options.

 

 

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