Do you really want a bargain when you buy a home? So the FHA renovation loan is the way to shop, save money, and get instant equity in your home.
This exciting renovation loan program allows a borrower to move a home from one location to another, place a new foundation, and attach the old home to the new foundation.
A few years ago, one of my clients was looking for a home, she was getting frustrated because she couldn’t find a home within her budget that was the right size for her family.
At the same time that he was looking for a home to buy, a developer in Roswell Georgia had purchased land to build a subdivision. There were houses on the land that needed to be demolished or moved so that he could complete his project. The houses were in good condition so instead of demolishing them he decided to give them away, the recipient would be responsible for the cost of moving the houses. He donated the houses to a church, this was a smart move for the developer because it was a tax write-off for him.
My client was an active member of the Church and requested and received one of the houses; it was her responsibility to pay for the move. The new problem he faced was not having a place to move the house right away. Wherever there were deadlines that had to be met, because the developer had to move the houses in order to begin construction.
He started looking for a lot and he was having the same problems he had when looking for a house, he couldn’t find a lot within his budget that was big enough for the house. In a very rare case, HUD had a parcel of land for sale within the Atlanta city limits. He would have to bid on the land and there was no guarantee that he would win the bid. She won the bid and it was now a matter of her moving the house from Roswell Georgia to Atlanta Georgia at a distance of approximately 15 miles.
Movers had been contacted about the move, but they wanted their $ 9000.00 up front and my client didn’t have that kind of cash. The beauty of the FHA renewal loan program is that the cost of the move can be financed with the loan, it was a matter of getting the House Mover to agree to wait for the loan to close before they could get their money. After talking to the mover and explaining how the renovation loan program worked, he agreed to wait until closing, he also agreed not to receive a deposit from my client because the loan program is FHA insured.
The cost of pouring in the new foundation, attaching the old house, and repairs after the house was attached amounted to $ 22,000.00. A 20% contingency fee was added to the loan in case there were any issues during move-in. There were no problems so 20% was applied to reduce the principal balance.
Once the home was attached, the appraiser was called in to project a value once the home was finished. The value he predicted was $ 62,000.00, that was a lot of instant capital for my client.
Vision is needed when buying a property using the FHA renovation loan program and my client certainly had a vision.
