Before and After an FHA 203k: The Real Story
Before and after photos can tell a great story. This is especially true of home remodeling projects. Your don't really see the impact of a bathroom remodeling project unless you see how bad it was before. That's why so many home buyers don't really see the power of the FHA 203k home improvement loan.
With the 203k loan, you can roll the cost of this new bathroom (and so much more) directly into the mortgage that's paying for the house itself. Let's take a look at one story, and how an Ohio home buyer used the FHA 203k to buy a home and remodel most of it - turning the house someone else decorated, into the home of her dreams.
Laura H, the buyer, bought this southwest Ohio home in February. About 5 months later, she has a new home - after a $64,000 renovation project. This property received many updates including a new roof with a new gable, a new rear deck that had to be replaced, lots and lots of drywall repair and painting, a new kitchen and appliance package, new flooring throughout, a new hauled-in water system, additional exercise room build in the lower level and more.
Joe Daly, AmeriFirst Home Mortgage renovation program manager (and licensed FHA 203k mortgage specialist) handled this particular deal. He says, "This house seemed to go on and on, looking bigger than the time I had walked through it originally with my borrower and their choice contractor last November. It's just amazing."
These pictures speak for themselves. They are a true example of what the 203k is! A living, breathing mortgage product that allows home buyers to actually participate in the renovation of our current housing stock (with foreclosed homes and vacant houses in need of some TLC), one home at a time.
Laura is excited, too. "Every time I look at the photos I am amazed at the transformation," she tells us. "Not having done this type of project before and never thinking of myself as much of an interior designer, I am very proud of how it all turned out. Thanks go out to Joe Daly and everyone who contributed at AmeriFirst to help make this dream come true!"
Joe says this kind of project really helps show real estate agents, builders and buyers what the FHA 203k can do for all of them. "The property was a Fannie Mae foreclosure," Joe says. "The borrower chose the FHA 203k due to its low down payment option. We spoke of refinancing their current mortgage to a lower rate and the possibility of going conventional if the appraisal comes in high enough. A true real-life success story!"
Laura's Realtor - Lori Pike of Sibcy Cline Realtors - says the FHA 203k is a great option for a lot of homes in today's market. Lori says a lot of agents avoid the 203k like the plague because of bad past experiences. However, after attending a Realtor CE class on the 203k, she realized it didn't have to be so bad. "People don't understand the process of the 203k," Lori told us. "Most Realtors shied away from them - they're too much work and you can never seem to get the deal closed. But people are inspired by this project (with Laura). It went smoothly and it looks great. Plus the house is now worth a whole lot more then what they paid for it. It's a win-win for everyone."
Joe gets excited about the benefits of this renovation loan program. "In summary, a great win-win-win for everyone involved – Fannie Mae, Fannie Mae’s Listing Broker, the Realtor, buyer, buyer’s Realtor, the general contractor and the myriad of subcontractors who also benefitted from someone utilizing private dollars (FHA 203k mortgage monies) for their renovations, the community, the surrounding property owners, etc., etc……I could go on and on." Click the link to see the full collection of FHA 203k projects before and after photos.
You can learn more about the 203k loan option with the video playlist below.
Get to the playlist on YouTube here - FHA 203k Video Playlist
How Much Does the FHA 203k Cost?
That's a good question. Of course, much of the answer depends on what you buy the house for, and how much remodeling you choose to finance. But keep this number in mind: $6 per $1,000. For every thousand dollars in renovations you finance with the 203k loan, you'll add about $6 to your monthly house payment.
So this $64,000 remodeling project added about $380 dollars to the house payment. But if you're buying a home at far below the market value - as is often the case when buying a foreclosed home - and you're adding value with the remodeling, then your home is going to increase in value by simply finishing the work. In other words, you'll have more home than what your payment indicates. It's a winning situation.
Download our free eBook to help you further understand the nuts and bolts of this home improvement loan. Get "The FHA 203k Survival Guide" at the button below. Want to know if your remodeling project is covered by the 203k? Leave a comment below and we'd be happy to let you know!