AN FHA LOAN PROGRAM FOR FIXER UPPERS

It’s hard to deny the remodeling movement is gaining momentum. It seems as though everyone from your neighbor to your local politician is remodeling his or her home, and the guy at the hardware store or the contractor across town is everybody’s new best friend.

Countless TV shows depict eager home buyers purchasing charming, character-filled fixer-uppers — and fixing them. The ending is always happy.

But what those shows don’t talk about is how much real home owners can pay to make a remodeler’s nightmare into a dream home.

Without the benefit of TV.

Thankfully, there’s a mortgage loan that appeals to the dreamer in all of us, and it reduces the fear factor of purchasing a place that needs work.

First-time home buyers are generally familiar with Federal Housing Authority loans, but they may not be aware that there’s a branch of FHA loans perfect for those ready to take on fixer-uppers —FHA 203k mortgage loans.

For homeowners with vision, a 203k mortgage provides funds not only to buy a home, but also for necessary remodeling.

For those who find the remodeling nightmare is worse than they feared, most 203k loans come with a 10 percent to 20 percent contingency reserve to protect against the unexpected, like shaky foundations or mold. But these mortgages come with specific stipulations.

For example, borrowers must provide estimates for their desired upgrades and  renovations, including labor expenses — something that isn’t always easy to do.

Lower down payments and less stringent credit requirements make 203k loans a great option for home buyers with can-do spirits.

However, it is also necessary to meet specific criteria — not all properties or repairs qualify, and you need to determine whether you can do the work yourself.

Talk to your real estate agent about the proper procedures, eligibility, and potential problems. If you’re up for the challenge, it’s great to get help turning your fixer-upper into your dream home.

What impact does housing have on the economy?

Real estate has played and always will play a large role in the economy.

Housing can contribute to a country’s economy through new home builds and also through the rental segment. And, of course, it also contributes through the process of home buying and selling in terms of fees, taxes and mortgage loans.

But even more important are the massive spinoffs generated by homeowners — both new and current — to their homes.

The home improvement segment represents billions of dollars and includes all the components of remodeling projects, such as purchases of lumber, paint and fixtures, as well as money earned by contractors, plumbers and electricians.

All this spending adds up to billions of dollars a year pumped into the economy.

As we saw in the 2008 recession, housing and the economy are interdependent. As the song says, “you can’t have one without the other.”