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New: How I Got The Gumption: The FHA 203K Loan

Posted on Mar 3, 2017

Sometimes, renovations can cause even the mildest mannered homeowner to panic. After all, home improvements can be costly and stressful. However, when Pickett Street’s very own Margaret Smith, Director of Operations, decided to purchase a vacant, bank owned fixer-upper, the FHA 203K Loan presented her with an opportunity that turned the process into a dream come true.

Margaret bought her duplex in south Everett near Paine Field in August 2014. It was a bank owned property, meaning nobody had been living there for over a year. The previous owners had gone into foreclosure, so the home sat there vacant, lacking love and attention. The upstairs unit was a 3 bed, 1 bath layout that Margaret planned to rent out. It needed a new bathroom, new washer and dryer, a fresh coat of paint on the laundry room walls, and an all-around thorough scrubbing. The bottom unit was a 2 bed, 1 bath layout that was perfect for Margaret and a roommate. That 2 bed unit also needed a new bathroom, new kitchen and new vinyl wood flooring (which also needed to be leveled). The bottom half of the duplex’s exterior required a new paint job, and some general TLC. The work didn’t scare her, since Margaret saw the situation as an opportunity to make use of an FHA 203K loan, recommended by her trusty Loan Officer, Cody Touchette (MLO 83216).

A streamlined FHA 203K loan allows the borrower to put a small payment (around 3.5%) down. Even better, the borrower can add up to $35,000 onto the loan, depending on what the loan officer can verify, for any renovation work that needs to be done immediately. For a full FHA 203K loan, there is no maximum to the renovation budget, you are only limited by your county’s maximum FHA loan amount. Since the downpayment for the FHA 203K is so modest, the loan is ideal for first time homebuyers who need to complete renovations.

Finalizing the loan’s approval and finishing the necessary work was straightforward. After consulting with Caliber Home Loans’ Cody Touchette (MLO 83216) to ensure her property could qualify for the FHA 203K, Margaret made an offer for the loan that was accepted. Then, she worked with a contractor to compile an estimated price for the work and submitted the bid to Caliber Home Loans. Once the bid was approved and the house closed, work on the necessary renovations started immediately (all work for 203K loans needs to be finished within 6 months). Margaret had the work inspected, handed her Caliber Home Loans check to the contractor, and moved in. From start to finish, the whole process (including finding tenants for the upstairs unit) lasted from August to October — only 2 months! After all was said and done, her roommate moved in, and Margaret paid $0 of her mortgage. That’s right: $0. In the end, she only paid the water/sewer and electric bills for the lower unit.

Margaret’s degree in Art from Pacific Lutheran University and her general love of all things creative, significantly helped her through this process. Throughout the renovations, Margaret was able to visualize her finished product and design it according to her artistic tastes and personal style. In fact, one of the advantages of a FHA 203K loan is that it makes the financial side of home improvement manageable, making it easier for you to enjoy the process of renewing your home. When that happens (as Margaret discovered), renovations become exciting and creative art projects, rather than financial woes. In the end, Margaret enjoyed the results of her FHA 203K loan so much, she made plans to buy and renovate another unfinished duplex in the future. Ultimately, she plans to buy a larger home and live in the upstairs unit.

The FHA 203K loan is just one example of the many options that exist for homeowners. Often, it’s easy to feel trapped in an unsatisfactory housing situation, especially if the only solution seems to be spending way too much money. As loans like the FHA 203K illustrate, nothing could be further from the truth, and it’s very possible to find the ideal home without breaking the bank. To learn more about the options you have as a homeowner, contact Margaret (#425-502-5397) or Cody Touchette (MLO 83216). They’re here to help you see the opportunities, and there are many!


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