Purchasing a Fixer Upper Home Made Easy with FHA 203-k

STOCKTON, CA - APRIL 29: (FILE PHOTO) A forec...

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These days it seems nasty homes are more than easy to find. It never ceases to amaze me how normally nice people will take out all their anger and frustration on a home! Over the course of my career I’ve seen homes where the previous owner removed everything that wasn’t nailed down, door knobs, toilets, bathtubs, carpet, appliances even the kitchen sink!

Once I listed a bank property in Cripple Creek (before gambling was legal) where the owner turned the water on and left. The town water-meter maid finally figured out no body was home and shut off the water, but that was after many weeks of running. The bank I represented was responsible for paying the water bill before the property was sold. It was in the thousands of dollars! The worse part was the house. The moisture in the home caused the wall board to collapse. The seeds in the carpet sprouted and we had plants growing inside.

Needless to say the bank had to let this property go for a fraction of it’s value. So sad. So pointless.

Ah but I digress! The buyer of this property normally would have had to pay all cash for it, due to its deplorable condition. However if they buyer wanted he could have gotten an FHA 203-k loan to fix up and mortgage the property at the same time.

The 203-k mortgages are trickier to do than the normal FHA loan, but on the right property with the right buyer, they certainly can solve a lot of problems.

Here’s what a 203-k can do:

Make any kind of improvement from simple remodels to complete rehabilitations.
Convert one unit into 2-4 units or greater than 4 units into 4 units or less
Demolish and rebuild a new house on an existing foundation
Mixed use residential properties are eligible
Borrow up to 110% of the “after-completed” value
Include all repairs in the mortgage (Minimum $5000)
Eliminate health hazards (lead paint)
Make structural repairs and alterations (including additions)
Remodel kitchens, bathrooms, etc.
Replace siding, roof, gutters, downspouts, etc.
Update plumbing, heating, electrical systems
Install or repair the well and/or septic systems
Replace flooring, carpeting or tile
Make energy conservation improvements; Double pane windows and doors, insulation, caulking
Add decks, patios, fencing.

FHA 203-k loans can assist not only in the purchase of a home, but in adding value to the property and the neighborhood. Keep this wonderful program in your “bag of tricks” for the next time you see a sweet deal that needs some enhancing!