From Margaret on October 19th, 2010 in General Remodel
With winter around the corner – and the desire to cut down spending in any area we can – increasing your home’s energy efficiency can cut utility costs. And the government can help.
Yes, the Federal Housing Administration’s 203(k) rehabilitation program allows those looking at daunting-but-necessary renovation tasks to make the repairs without dipping into savings or looking into home equity loans.
Rather, the loan allows you to both purchase a home and cover the renovation projects it needs. The point is to size up your renovation projects with accurate price quotes, and then apply for the federal program, which adds the remodeling costs to your mortgage balance and can be paid off after the home is purchased.
This may seem like a new and innovative concept, yet this little-known program has been around since 1978. Why hasn’t it been more popular, you may ask with a raised eyebrow? Largely because of poor publicity and because borrowers often mistakenly think they have to buy a wreck in order to qualify.
While luxury improvements are of course ineligible, the program has a broad definition of repairs and modernization. The place doesn’t have to be falling apart to qualify for renovation help. Here are just a few qualifying improvements:
- Roofing replacement
- New heating system (even geothermal)
- Room additions
- Decks and patios
- Energy conservation improvements
- Interior painting
To get started, find out how much your home improvements would cost. You can obtain multiple cost estimates for free, and then compare them side-by-side to get the best deal.
Remember, it doesn’t have to be a run-down house. “Run-down” typically means foreclosure, but the program also applies to older houses, historic houses, short sales, bank-owned homes, and places that are simply outdated. Check the rules here.
A loan “for someone who’s willing to be a little involved,” as a Madison, Conn., banker Jon Sigler put it, this loan is also for someone willing to put a bit more thought into how to save a lot more money down the road.
Photo via Wonderlane on Flickr CC