203(k) Renovation Loan on a Functionally Obsolete Property
Example of 203(k) Renovation Loan
This is an example of an FHA 203(k) Renovation Loan on a functionally obsolete home that was a 3 bedroom and 1 bath house. This property was improved to become a 3 bedroom, 2 bath home using a 203(k) loan. This home resulted in a 1100 square feet of living space, added a great room, an additional bathroom, and a garage. The tree was also removed with the funds from the renovation loan.
Details of Monthly Payments Added to the Loan Amount
While this property was under renovation, all of the monthly payments were financed into the loan amount. Therefore, no monthly payments were needed while the contractor completed the necessary and desired repairs on the subject property. Thus, the borrower did not need to make two payments (one for the current living arrangement, and the other on the subject property). The payments were added to the loan amount for a period of 6 months, while completing the property, then the borrowers began making payments on their own, consistent with the loan terms.
Family Stability
This was grandfather’s house, that his granddaughter purchased after he died. There was lots of deferred maintenance that was corrected with the renovation of this property. The granddaughter grew up in this neighborhood, knew all of the neighbors, and wanted to raise her family in a known environment. This was an affordable option for the family to achieve their dreams of desired neighborhood with a home that worked for their family.
Appraisal
The future value appraisal supported all of the repair, maintenance, and expansion costs on this property. The final down payment was 3.5% of the acquisition on this property. This property value increased because of the repairs, upgrades, and modifications completed on this property. It would have cost more to purchase a comparable property in the current neighborhood. A FHA home improvement loan can be the perfect solution for those looking to purchase a fixer-upper and upgrade the home.
Final Outcome
The family was able to move into their desired neighborhood, affordably, and live among their peers. They are overjoyed with their financial and lifestyle decision.
Have Questions?
Please call me to discuss any questions you may have in regards to your renovation project.