If you’ve been involved in a natural disaster and lost your home, you may have found that your home or contents insurance does not cover you. You may therefore be worried about where you stand and want to know where to turn. There are certain types of loans you can consider and here we’ll explain a little bit more about them and how you can get a home loan for disaster recovery, so that you and your family are protected in the interim and can rest as easy as possible.
The Types of Home Loans for Disaster Recovery
There are several types of loans you can consider taking out and they are as follows:
1.) SBA Loan: These types of loans are limited to $200,000 and the house must be located in an area that is known to be somewhere prone to natural disasters. These type of home loans for disaster recovery can be used to repair or totally replace a home that has been decimated by a freak event. You can usually apply for these online or in an SBA Office, but consumers should know that they can be more restrictive than other types of loan
2.) Individual and Household Program: This is a scheme initiated by the Federal Government and can be used if insurance or other home loans for disaster recovery are simply not enough to help you out. They can be put towards repairs, temporary accommodation or helping to rebuild a home. You can apply via FEMA or online.
3.) 203 (h) Loans: These are FHA loans which can be used to rebuild or totally renovate houses that have been decimated by disaster. To qualify for such a loan you must be able to prove that your home has been damaged to such an extent that it will need an extreme amount of repairs or even a total rebuild. They offer you 100% financing but can only be used on single family residences. One drawback of this type of home loan for disaster recovery is that you’ll be expected to take out and pay an upfront mortgage insurance premium followed by a monthly mortgage insurance premium. The amount you receive cannot exceed the FHA’s stipulated and designated about for the area you live in.
4.) 203 (k) Loans: These type of home loans for disaster recovery was designed by the FHA to simply cover people who wanted to rehabilitate a home that has been hit by a natural phenomenon. Again, they can only be used on a person’s primary residence and nowhere else, but have the added advantage of being able to be utilized for homes that are designated damage foreclosures or homes that are simply incredibly run down. If you do not have the funds to do this yourself, you can look to apply for one of these types of loans. If your home has been damaged to the point that you cannot live in it any more, then the loan will cover you for six months’ worth of mortgage payments. This means that you should be able to find somewhere else decent to live whilst your home is being repaired. The can only be used for homes and not to repair what the FHA might consider luxuries such as swimming pools etc. For this type of loan you must apply to an FHA approved lender and as it is quite a complex loan to take out, it can sometimes be bets to try and find a specialist 203 (k) Loan provider somewhere.
If you have been unlucky enough to have been involved in a natural disaster that you could have had no way of preventing or knowing about and you’ve either lost or had severe damage done to your residence, then it can be worth taking a little time to look into each of these home loans for disaster recovery and see if any of them could potentially help you out of your situation. Remember to only go to FHS approved lenders and to always consider each and every one of your options carefully and thoroughly before you commit to it as once you have taken it on, there is very little way of going back.
However, the bottom line with most of them is that they are still not easy to obtain and you must jump through many bureaucratic hoops to get hold of one. You should also know that you might have to pay interest on the money that you borrow, and although this might be something that would put many people off but it can be worth it in the long run to make sure that the repairs and restoration of your family home or main residence are carried out thoroughly and properly and completed to your satisfaction so that you can move back in and start life afresh.