This is a long one. I recommend a glass of wine. Got your wine? Good, let’s begin.
I never understood how people buying serious fixer-uppers paid for all the fixing-upping. Like, who has $150k on top of a down payment just lying around to pay for services? If you have all that dough, why not just buy a new house? Then, as we found ourselves strolling the vertigo-inducing uneven floors of the WPW, our agent mentioned this magical thing called a 203k loan.
Put simply, a 203k loan is a federally-backed loan whose goal is to rehabilitate houses that have fallen into disrepair. It packages the cost of the house purchase and all the renovations into a single mortgage with great interest rates and low down payments. It may almost sound too good to be true, but I assure you it’s not, as long as you (and the sellers) are willing to accept the vast amount of time and work that needs to happen before you can close.
203k loans are complicated because there are a LOT of moving parts that all need to come together in exactly the right order but also kind of all at the same time (you’ll notice a lot of “in the meantime” below). Your life will be far easier if you first and foremost find a mortgage consultant who specializes in 203k loans (sometimes called “renovation specialists”) and can help you make sure you get all your paperwork in order. I can’t overemphasize this point. Ours was amazing and I have no idea how we would have done this without him.
Once you have your mortgage consultant, here’s a basic breakdown of all the major steps involved: Continue reading