With so many homes being foreclosed on, the amount of bank owned (REO) properties continues to grow. Although the prices are relatively low, unfortunately many times so is the condition of the home. If a homeowner cannot afford his or her mortgage payment do you think they would invest money in updating the kitchen, replacing carpets, or making various repairs?
Investors have been buying homes that need cosmetic updating and basic repairs, fixing them up and selling them for 30-40% more than they paid for the home. For example, a home in Vacaville was purchased by an investor for $130,000 about 2 months ago and is selling for $200,000. This home has new paint, carpet, appliances, granite countertops, vanities, lighting fixtures, windows, and landscaping. I am by no means an expert on pricing for these various updates, but I can tell you there are not $70,000 worth of upgrades in the home.
The average buyer does not have the funds to pay for $15,000 to $35,000 worth of upgrades when they purchase a home, and most buyers looking for a home they can move into as quickly as possible.
There is a solution!
There is a program called the Streamline 203(K). This allows homebuyers to finance up to an additional $35,000 into their mortgage to make upgrades or improvements before they even move in. Paint, flooring, basic kitchen remodeling, appliances, roofs, and plumbing are all covered under the program. I was able to talk to a "203(K) Expert" and was amazed at how easy the process is for homebuyers. There are many ways to have the repairs or upgrades done but the easiest is to have a company that is approved by the program such as Home Depot or Lowe's do everything for you. You meet with the contractor and go over everything you want done and pick colors, materials, etc. Once escrow closes the company will go into the home and do the work you have agreed upon. Once everything is completed you get to move into a home that is even better than one of those investor flips because you got to pick everything out yourself. Also, depending on the details of your loan mortgage payments typically do not start until you have moved into the home.
The best part about this program is the homeowner only has one mortgage payment and at the end of the process has most likely built equity into their new home.
Contact your lender for more details about this program.
is this program still around? And how do I find out more about?
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