Do you really want a bargain when purchasing a home? Then the FHA renovation loan is the way to purchase, save money and get instant equity in your home.
This exciting renovation loan program allows a borrower to move a house from one location to another, have a new foundation poured and have the old house attached to the new foundation.
Some years ago, one of my clients was looking for a home, she was getting frustrated because she was not able to find a house within her budget that was the size that would accommodate her family.
At the same time she was looking for a house to buy, a developer in Roswell Georgia had purchased some land to build a sub division. 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 conditions so rather than 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 she requested and received one of the houses; it was her responsibility to pay for the move. The new problem that she faced was not having somewhere to move the house right away. There where time frames that had to be met, because the developer had to get the houses moved so that he could start his build.
She started her search for land and was having the same problems she had when she was looking for a house, she was unable to find land within her budget that was large enough for the house. In a very rare instance HUD had a plot of land for sale inside the city limits of Atlanta. She would have to bid on the land and there was no guarantee that she would win the bid. She did win the bid and now it was a matter of her getting the house moved from Roswell Georgia to Atlanta Georgia a distance of about 15 miles.
The house movers had been contacted about the move, but they wanted their $9000.00 upfront and my client did not have that kind of cash. The beauty of the FHA renovation loan program is that the cost of the move can be financed into the loan, it was a matter of getting the House Mover to agree to wait for the loan to close in order to get his money. After speaking to the mover and explaining how the renovation loan program worked he agreed to wait until the closing, he 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 was attached came to $22,000.00. A 20% contingency fee was added into the loan just in case there were any problems that occurred during the move. There were no problems so that 20% was applied to reduce the principal balance.
Once the house was attached, the appraiser was called to project a value once the house was completed. The value he forecasted was $62,000.00, that was a lot of instant equity for my client.
It takes having a vision when purchasing a property using the FHA renovation loan program and my client certainly had a vision.