September 1, 2011
With Hurricane Irene now a memory, the job of cleaning up and recovering still challenges many communities. President Obama has declared parts of New York and North Carolina as federal disaster areas, and the FHA has announced help for those in those areas.
We’ve run quite a number of these announcements in 2011, and regular readers likely notice a pattern; FHA assistance for federal disaster areas includes FHA loan foreclosure moratoriums, forbearance and other assistance, it also includes FHA loan help in the form of the FHA 203(k) rehab loan.
The FHA 203(k) is one of the most important types of help FHA/HUD offers to those in the disaster areas because it offers a long-term solution in addition to assistance with short-term issues. Storm victims need temporary shelter, food, clothing and other help in the days immediately following the natural disaster; over the long-term they also need help repairing or even replacing damaged homes.
That’s where the 203(k) rehab loan comes in. According to the FHA official site, “The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place.”
The FHA adds, “Section 203(k) insured loans can finance the rehabilitation of the residential portion of a property that also has non-residential uses; they can also cover the conversion of a property of any size to a one- to four- unit structure.”
In the wake of a storm, people who want to apply for an FHA rehab loan of this type may be considering upgrading or improving the existing structure rather than simply fixing the damage done. FHA rules say the types of improvements a borrower can make with an 203(k) loan include structural alterations and reconstruction, modernization and improvements to the home’s function, and “elimination of health and safety hazards”.
There are other allowed uses of a 203(k) loan. A list provided by the FHA says a borrower may use 203(k) funds for the following:
–improving appearance and eliminating “obsolescence”
–reconditioning or replacing plumbing; installing a well and/or septic system
–adding or replacing roofing, gutters, and downspouts
–adding or replacing floors and/or floor treatments
–major landscape work and site improvements
— enhancing accessibility for a disabled person
— making energy conservation improvements
For more information about an FHA 203(k) loan, contact your FHA-approved lender or see the FHA official site.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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