March 5, 2012
Recent tornado clusters across the southern and midwestern United States have placed some communities in dire circumstances. In some instances entire towns have been damaged or destroyed by high winds and flying debris.
Those who have FHA home loans should know about the resources available to them in the wake of natural disasters–borrowers and home owners are not left on their own to recover from storms, floods, and tornadoes.
The first move a home owner should make, whether an FHA, VA or conventional borrower is to examine the Federal Emergency Management Agency’s Three Step Assistance Plan, which includes a list of frequently asked questions, application forms and what to do after you’ve applied for help.
Help from the FHA comes in a variety of ways. The FHA 203(h) program, for example, is designed to assist those in federally declared disaster areas. According to the FHA official site, “Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary.”
How is the FHA 203(h) loan used? “Insured mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner.”
The FHA 203 (h) loan is unique–it’s one of the very rare instances where no down payment is required for the home loan. Most FHA home loans require some form of down payment when purchasing property. The FHA official page states, “No downpayment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing or by the seller, subject to a 6 percent limitation on seller concessions.”
Who is eligible for the FHA 203 (h) loan? Anyone whose home has been destroyed or severely damaged in a Presidentially declared disaster area, according to FHA.gov. In order to apply, the borrower must submit paperwork to a participating FHA lender within a year of the disaster declaration.
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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