If you are one of the millions of Americans who will not win HGTV’s Dream Home 2013 there is still hope. Last year we presented a unique solution to getting a dream home of your own at a cost not greater than a normal rent payment. Low and behold borrowers called in and made it work for them. Here’s how the Dream Home Program works:
What makes a dream home?
Well it is your personal vision, so what better way to make a dream home then by creating it yourself from the foundation up?
We have a mortgage product called the FHA 203k home repair loan. Despite popular belief the FHA 203k is for more than just fixing furnaces, in fact, the 203k lets you strip a home down to the studs and rebuild it the way you want (anything but foundation in full 203k loan). You can do as little or as much as you want to the home as long as the cost of improvements plus the amount you want to borrow is less than or equal to the appraised value of the home.
Here’s how it works in Grand Rapids, Michigan:
A borrower purchases a home near downtown for $15,000. The home is in rough shape but overall the neighborhood is good. A remodeled home of similar size in the area usually sells for $95,000. The borrower thinks about what he wants the house to be like and a contractor provides an estimate for what it would take to make the house look like that. If the repairs/redesigns cost less than $80,000 we go ahead as planned and roll the $80,000 in repairs into the mortgage itself. The borrowers are not paying for the repairs/upgrades out of pocket, but rather their monthly mortgage payment reflects the normal payment they would owe on a $95,000 loan (assuming that is the amount borrowed after downpayment and closing costs). If they had a 3.75% interest rate the family might end up with a monthly payment below $750 a month* which could include taxes and insurance.
Overall the FHA 203k is a great way to make any home your Dream Home in 2013. With housing inventory low, and interest rates even lower the FHA 203k is a great way to get you and your family into a dream home.
PS– In addition to the great opportunities the FHA 203k brings, at current for Michigan borrowers there is also a $3,000-$5,000 MSHDA first time home buyer grant available while supplies last.
**Above example is only an estimate of what one borrower qualified for in 2012.