Virginia FHA 203k  Class A Contractor
Join us on Facebook
  • Home
  • Portfolio
  • Getting Started
  • 203k Resources
  • FAQ
  • About Us
  • Consulant's Role
  • Case Studies
  • Contact Us
  • We Buy Houses
  • How to Refi and Renovate with a 203k

Case Studies - The Power of a 203k Loan!

In this section, we will take a look at the numbers and show you why a 203k makes sense.  

The following is an actual example of a 203k Loan completed in 2011:
PRINCE GEORGE, VA ~ 203K Renovation:   This owner purchased the home for $134,000. The owner completed approximately $60,000 in renovations to the property which included adding a detached garage, remodeling 3 bathrooms, totally remodeling the kitchen to include new custom cabinets,  new two zone HVAC, new water heater, new windows, new roof, refinished hardwood floors, upgraded insulation and a complete paint job.   The house was appraised at $269,900 with these renovations.  With the purchase price of $134,000 plus $60,000 in renovations, minus the 3 ½% down payment of $6650, the owner had a loan balance of about $187,350.  This left the owner with approx $82,550 in equity!   
This is the cool part! .... The owner's payment on the property was right at $1,300 a month.  Now having over 20% equity in the property, the owner realized that they could refinance into a conventional mortgage and do away with the PMI* that they
were paying on this loan. This reduced the payment on the property from $1300 a month to $1147 a month.  However, without the 203k loan, the $60,000 in renovations would not have been possible!  Thus, the power of the 203k!
      
*PMI is Private Mortgage Insurance. This is basically a fee that lenders charge on certain mortgages that protects the banks interest in the property.  While this customer was a nice person, they were not so nice as to want to pay $150 per month to protect the bank!! 
Results are different for every house and vary based on many factors such as purchase price, interest rate, renovations completed, etc.


Scenario #1 - It allows a borrower/purchaser to buy a home that they otherwise would not have the extra money to invest into fixing it up.  This is important for a number of reasons, but a common scenario is this: A buyer has been looking for a home in a particular neighborhood (could be because of the school district, close to family/friends, work, etc), however it always seems like the only homes that come up for sale are either 1) out of their price range or 2) are priced within their range, but need too much work.  Most buyers in this situation usually end up discouraged and settling for a house in a
different area.  However, now that you are buyer who knows about a 203k loan, you can jump on that house that needs work and be able to put your own vision into renovating the home (lets face it!  Most buyers do not know about these
loans, so you have an advantage now).

MORE TO
COME.......
Priority Home Solutions, LLC : Phone (804) 458-3547