Do you really want a bargain when buying a house? So the FHA Renovation Loan is the way to buy, 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, pour a new foundation, and attach the old home to the new foundation.
A few years ago, one of my clients was looking for a house, she was getting frustrated because she couldn’t find a house within her budget that was the size that would accommodate her family.
At the same time he was looking for a house 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 beneficiary would bear the costs of moving the houses. He donated the houses to a church, this was a smart move for the developer because it was a tax deduction for him.
My client was an active member of the Church and applied for and received one of the houses; it was his responsibility to pay for the move. The new problem he faced was not having a place to move the house to right away. There were deadlines that had to be met, because the developer had to move the houses in order to start construction.
He started his search for land and was having the same problems he had when looking for a house, he couldn’t find a piece of land within his budget that was big enough for the house. On very rare occasions, HUD had 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. He won the bid and now it was time to move the house from Roswell, Georgia, to Atlanta, Georgia, a distance of about 15 miles.
The mover 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 renovation loan program is that the cost of the move can be financed out of the loan, it was all about getting the mover to agree to wait for the loan to close to get their money. After speaking with the mover and explaining how the renovation loan program worked, they agreed to wait until closing, they also agreed not to take a deposit from my client because the loan program is FHA insured.
The cost of pouring the new foundation, attaching the old house, and repairs after the house is attached totaled $22,000.00. A 20% contingency fee has been added to the loan in case any problems occur during the move. There were no problems, so the 20% was applied to reduce the capital balance.
Once the house was attached, the appraiser was called in to project a value once the house was completed. The value you predicted was $62,000.00, that was a lot of instant capital for my client.
It takes a vision when buying a property using the FHA renovation loan program, and my client certainly had a vision.
