Q: Because of the heavy ice last year, my house was severely damaged. My roof and ceiling are especially in need of extensive repair? Is an FHA 203(K) mortgage worth looking at?
S. Rosenblatt, Baltimore
A: The FHA 203(K) mortgage loan program, which is offered by a number of local lenders, allows a homeowner to refinance and renovate a property by means of a fixed-rate mortgage with as little as 2 percent down. In addition, many so-called "soft costs" can be financed, such as for an architect, building permits and points.
There is a minimum amount of rehabilitation required -- at least $5,000 in eligible improvements on the existing structure. Minor or cosmetic repairs do not qualify to meet the minimum, but they can be included if the eligible improvements meet the $5,000 minimum. Qualifying improvements include:
* Structural additions, such as finishing a basement.
* Repair of termite damage.
* Remodeled kitchens.
* Roof and ceiling repair.
* Replacement or upgrade of electrical systems, heating, plumbing, or air conditioning.
It appears that an FHA 203(K) mortgage would be worth looking into.
Q: Could you give some details about Veterans Administration loans? Are reservists eligible?
Phil Tagliaferri, Bel Air
A: Reservists are eligible for VA loans. To be eligible, you must have been a reservist for six consecutive years, during which you must obtain at least 50 VA points of credit per year by participating in reserve activities. Also, if you qualify for a VA loan and meet income and creditworthiness guidelines, the VA will guarantee a maximum mortgage of up to $184,000. The VA will also allow you to finance the VA funding fee on top of the mortgage.
Finally, according to underwriting guidelines, the combined monthly mortgage payment and additional monthly recurring debt cannot exceed 41 percent of the borrower's gross monthly income.
For more information about VA loans and benefits, call Veterans Home Mortgage at (410) 583-7474, or the Baltimore Veterans Administration office at (410) 685-5454.