How to buy a fixer upper with a 203k loan may be the magic you need.
Bedford Avenue in Teaneck is a great place to live. Located off of Teaneck Road, it’s an amazing setting. It ends at what looks like a forest but is actually the extension of Argonne Park. The street is lined with gorgeous towering trees and deer often walk through the neighborhood. People are friendly and help each other out. Who would move from here?
Because Bedford is such a great neighborhood, many residents stay for decades. As a result, sellers are often senior citizens. Seniors are usually on retirement incomes. Because their incomes are limited, they can’t afford to update their homes.
I listed a home here recently. It is well cared for but like many other senior owned houses, it hasn’t been updated for a long while. Younger buyers see such homes as “needing work” and “fixer uppers”. This creates a purchasing problem.
Buyers are cash poor these days. Because of this, they have small down payments and can’t afford to fix up a house. The mortgage industry has responded to this. There are many low down payment mortgage options. The 203k program is basically a construction loan. 203k loans allow construction costs in addition to the purchase price. Here’s how it worked with my listing:
The purchase price is $275,000. The buyer is paying $310,000 with a 203k loan. $275,000 goes to the seller and $35,000 to fix up the house. The buyer is using the 35k to renovate the bath, finish the basement and install new kitchen counter tops and appliances.
Everyone is happy. The homeowner sells his home. The FHA loans 310 on a house worth more. The buyer buys an updated house with more value than he pays. What’s the catch?
203k mortgages cost more. They have extra fees and a slightly higher interest rate but they’re worth it. They cost less than a traditional construction loan and you can do this with a small down payment. Because the home is ultimately worth more it’s a win for the buyer.
This is how you get an updated home with 203k loans. It takes more effort but it’s worth it. Most mortgage bankers can not do 203k loans. This is a certified specialty. Contact Felicia Dori Festa to speak to a 203k certified banker. I’ve worked with Felicia for years – she’s an outstanding banker and a super nice lady.
The bottom line is that how to buy a fixer upper with a 203k loan is exactly the magic you need. It allows you to move into an updated home affordably. What could be better?