Finance
In Hawaii, an 'FHA 203(k) loan' is primarily used for:
AA. Purchasing new construction homes
BB. Purchasing and financing the rehabilitation/renovation of an existing home in a single loan✓ Correct
CC. Refinancing existing FHA loans at lower rates
DD. Financing commercial renovation projects
Explanation
An FHA 203(k) loan combines the purchase price and renovation costs into a single mortgage, allowing buyers to finance improvements to older or distressed properties.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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