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Turn a Fixer-Upper into Your Dream Home!


It has happened to every house hunter.......the house is in a perfect location in a great neighborhood in your preferred school district at a great price but the house is awful.  The kitchen, bathrooms, windows, heating system and flooring hasn't been updated in 20 years, not to mention the roof appears to be disintegrating before your eyes.  While you could easily afford the home at such a great price, you simply don't have the additional $90,000 +/- cash necessary to make it the home it could be, your dream home.

The under-utilized FHA Rehabilitation Loan program can turn a fixer-upper into your dream home for as little as 3.5% down payment. 

This mortgage combines the money to purchase the home plus the money to rehabilitate the property into a single loan and can be as much as 110% of the future (improved) value of the property!

Using the Rehabilitation mortgage, you can purchase the ugly duckling in the perfect location..........




                                          .........and turn it into your Dream Home!






The maximum loan is determined using the lessor of the following two calculations:

  • The purchase price plus the cost of improvements
  • 110% of the future (improved) value

Additionally, FHA limits the maximum loan by county.  In Contra Costa county, the maximum loan for 2009 is $625,500.

Rehabilitation costs that can be included in the mortgage include:

  • Materials and Labor
  • Overhead and construction profit
  • Permit and license fees
  • Consultant, architectural and engineering fees, as applicable
  • Contingency reserve
  • Six (6) months mortgage payments (if home is not currently habitable)

Eligible improvements include:

  •  room alterations and/or additions
  • kitchen and bathroom remodel or upgrades
  • decks
  • painting
  • energy efficient windows
  • energy efficient heating and cooling systems

    Required improvements include:

    • Heating systems, burners and air conditioning must be carefully sized to be no more than 15% over sized for the design and must be insulated whenever they run through unconditioned spaces.
    • Insulate all exterior walls and ceilings where necessary
    • Caulk, seal and weatherstrip all openings cracks or joints.
    • Install a smoke detector in each sleeping area.    

     

    If you have the vision to see past the ugly duckling to the future swan, there are some amazing fixer-upper bargains currently on the market.

    Copyright . Wendy Cutrufelli. All rights reserved.
    DRE # 01844864