Loan Program for Matthew Victims
Was your home affected by Hurricane Matthew? The President has designated much of our state as a disaster area. While much of the country moves on to current events and politics, thousands of people are left not knowing where they will live. Often during these times, home owners feel that their hands are tied when it comes to replacing their homes after flooding, fallen trees, etc.
There is, however, a program that may be worth looking into that I’d like to introduce to you. A 203(h) mortgage may be used to finance the reconstruction of the borrower’s current home or the purchase of another home elsewhere.
The FHA rules for 203(h) loans say, “Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area…(these) mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner.” Basically, an FHA 203(h) loan is for the homeowner who is looking to rebuild their home or replace it after a natural disaster and is likely to face difficulty with being able to borrow. FHA makes it easier for them to qualify for that loan by relaxing some of their guidelines. We will get in to those benefits in a moment.
But first here is the skinny on the FHA requirements:
- Some lenders may require proof of the damage from your Homeowner’s insurance or an appraisal.
- Application for an FHA 203(h) loan must be made within one year of the area being declared a disaster area.
- If you did not have an FHA-insured mortgage prior to the disaster, you are still eligible to participate in the Section 203(h) program.
- Borrowers may receive 100 percent financing, but need to meet certain credit score requirements.
This looks to be a great option for those affected by the recent storms. So what are the benefits of the program for disaster victims?
- No down payment: Unlike the 203(b) mortgage, borrowers with loans insured under Section 203(h) are eligible for 100% financing.
- Limited Fees: Many of the fees normally charged by lenders for conventional mortgages are capped under the FHA program. Other fees like property appraisal and inspection fees are actually set by the FHA.
- Loan Limits: HUD sets FHA loan limits depending on the area where the property is located.
- Credit history requirements are relaxed for disaster victims who may have late debt payments after the disaster. FHA also relaxes employment and income requirements for disaster victims who may be forced to obtain new employment, temporary employment or who have lost employment documentation in the disaster. FHA also relaxes many of its lending requirements, such as its minimum down payment.
All of these features help to make home ownership more obtainable for individuals in areas struck by disasters.
If you know of someone in a disaster area that needs information on this program. Get with me and I can send them to a participating lender.
The Jim Mills Team/ AgentOwned
For more info: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ins/203h-dft