Let me count the ways or in this case the reasons why a consumer should use the FHA 203k loan program
1) Get to pay less than market prices typically as you are buying a "fixer". Quite often and justifiably so, fixers are less expensive than homes that are fixed up and ready to move in.
2) It is possible to gain equity at the time of the purchase rather than waiting for a few years before you have any. Typical purchase of $250,000 that requires $50,000 in repairs, may actually have an after improved value of greater than $300,000. We had one recently that borrowed the maximum loan amount of $729,750 and the home appraised "as improved" at $2.1 million. That's a lot of equity. We had another smaller project where the purchase price was $250,000 was renovation at $75,000 for a total of $325,000 that appraised after improved at over $400,000.
3) You get to replace the carpeting, cabinets, counter tops, get fresh paint, etc. To me this is the biggest reason to buy a fixer with the FHA 203K loan program because you get to change the carpet. Who knows what happened on that carpet prior to you buying it. Chances are it was clean just before you got there and the stains will show up months later. I do know the we did a house in Orinda California and when the carpets were pulled up there were animal stains throughout the entire carpet where their dog or cat had marked their territory over a period of years.
Can you imagine letting your children play on that carpet, roll around, and you watch television while lying on that carpet just knowing that less than a half an inch away from you is animal urine. It's unconscionable to me. I think carpet in any house should be replaced and frankly I want to know what's underneath it. If there are stains all over the wood that I want to clean it with TSP can be sure it's safe and healthy for my children and grandchildren.
4) You get to fix the home then move into it... rather than moving in and spending every weekend for the next two years fixing it up. So many times I see people purchase a house only become a slave to it. The end up working weekends and evenings fixing it up in hopes that someday it'll be what they had planned. I prefer my clients get the house fixed up then move into it and enjoy it. This way their life is much brighter.
This is what it looked like when we first drove up to it. No garage or carport, no character.
The home Was given a facelift, a little character. This one should be wrapping up shortly so watch for the finished pictures.
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