Buying a home after a disaster seems like an overwhelming task, but the
government provides some help through a FHA program, 203(h). By
providing mortgage insurance to disaster victims, borrowers can finance
the purchase of a home or rebuilding costs.
After an area has been declared a disaster area by the President,
victims in that area are eligible for the 203(h) program, which
provides mortgage insurance. Since a disaster affects jobs, finances,
and property risk levels, the government offers to absorb the risk for
mortgage lenders. As a result, lending companies are willing to finance
a mortgage to buy a home or rebuild.
Mortgage insurance is not free though. You will need to pay an upfront
premium as well as monthly premiums. However, there are benefits to
this program. For example, no down payments are required for this type
of loan. Closing costs are to be paid in cash or as part of the loan
premium, not to exceed 5%. Fees, including origination, appraisal, and
inspection fees, are also set by the FHA.
FHA loans are targeted for low to mid income families, so mortgages are
limited to $172,632 to $312,895 for a single family home. The loan
amount depends on the cost of living in the area. For multi-family
homes, the loan amount can be higher.
FHA Lenders
FHA mortgage lenders are private financing companies, including banks
and mortgage companies, that have been approved by HUD to administer
FHA programs. Just like with any type of mortgage, you should compare
interest rates before committing to a lender. Online mortgage brokers
allow you to quickly compare quoted interest rates.
You have one year to file an application for the 203(h) program with your mortgage lender after the disaster.
The Process
By using the FHA 203(h) program, you only add a little extra paperwork
to ease your mortgage application toward acceptance. When you are
applying for a loan, you will want to ask for the application for the
mortgage insurance program. HUD approved lenders will submit the
application through the proper channels. At this point the mortgage
company will handle the rest of the process, you will just need to
complete the final loan paperwork.
To view our list of recommended lenders online for government backed mortgage
financing, visit this page: http://www.abcloanguide.com/govloans.shtml
