203(K) Rehab Mortgage

[flip_it_fast]

What in the heck is a 203(K) rehab mortgage? I saw this term in an article and had no idea what it was. It's something I had not heard of previously.

Here is a little bit that I learned about it.

This has been a hot ticket for investors who are picking up distressed properties, because it allows them to roll the price of the house and the cost to make it habitable or marketable into a single loan. And some foreclosures are in woefully bad shape.
But regular buyers also can use the 203(k), especially if they want to do some work on their dream houses before moving in. And, more important, current owners can use it as a refinancing tool to incorporate the cost of their home improvements into a new first mortgage.

I guess the FHA doesn't make these loans directly but rather insures the loan made by primary lenders against the possibility that the payments may not be made as promised by the borrower.

Thats about all I got about this. Have any of you used this type of loan before? If so, what do you think about it?