FHA 203k Mortgages and Underwater Properties – Is There Hope?

One of the best parts of FHA 203k mortgages is that overnight your property can “Poof” have equity! Who would have thought that was possible in this real estate environment – not most people, so let me explain in detail how this works.

Current Home Specs and Estimated Value

You own a home that is currently worth $300,000 – here are the details of the property:

This home, as it sits, is worth around $300,000 or so. This customer has a mortgage that has a balance of $295,000. So from first glance most borrowers would think that there is nothing they can do – no way to do any updating, no way to add any square footage; in these borrowers’ minds, they are just stuck. But guess what? That is not the case and in swoops your friendly and knowledgeable FHA 203k mortgage specialists (i.e. Jeff Onofrio).

So here is how we get this customer what they want even though they do not have the equity:

FHA 203k Renovation Lending and Future Value

Using this mortgage product we can allow a customer to finance the upgrades and renovations using the after construction value. So here is what the new property will look like:

With these new upgrades and additions the value of the property is now estimated at $475,000. The construction cost of adding in all the above was $120,000 plus a 10% contingency fund. The customer ended up using the contingency fund to put in some updated fixtures and then the remainder was applied back the principal balance.

Instant Equity

Today there is no better way to create equity in your house than to use a FHA 203k renovation mortgage. Equity is so hard to create in this environment but FHA has given us tools to do just that.

Contact me today to see how we can take your current situation and make it a better situation. Take your time and read my other blogs on FHA 203k mortgages so that you understand what to expect. When you do call or email me, please plan to spend about 15-20 minutes doing an initial FHA 203k mortgage introductory call. I do this with all potential clients so you understand the process and we set the expectation upfront.


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