There are so many reasons to buy a “fixer.” The “fixer-upper” is a home that is need of significant repairs, upgrades and modifications. They are often run-down and have been the victims of deferred maintenance. Others are just so out-dated that most potential buyers could only imagine purchasing one of these properties if they intended to give it a complete facelift.
There are lots of advantages to purchasing a fixer. They are usually priced below market value, in order to account for the work necessary to bring them up to neighborhood standards. And the fact that rehabilitation work is necessary allows the buyer to customize the home to her own taste.
Traditionally, it has been difficult to obtain certain types of financing on these types of homes. This has been advantageous to cash buyers, who can often take the property off the market significantly below asking price, simply because so many repairs would be required if the home were to sell to a buyer obtaining financing. This is true because lenders generally will not release the loan funds until the condition and value of the home are satisfactory to their guidelines.
Even the types of loan programs that are available for properties in distressed condition won’t provide the buyer with additional funds to renovate. When a buyer wishes to purchase a fixer to remodel, she usually must first obtain initial financing to purchase the home, then get an additional loan to fund the modifications, and finally refinance both of those loans into a permanent San Diego mortgage. Often times the first two loans mentioned above are at high interest rates and not amortized over long periods.
FHA’s section 203(K) was created to provide an alternative to this three-loan process. The borrower only has to take out one long-term loan, at a fixed or adjustable rate, in order to finance the purchase and renovation of her “new” home. The mortgage amount is based on the future projected value (value of the home after the work has been completed).
Your mortgage broker can give you complete details, as well as go over current San Diego home mortgage rates.
With a 203(K) mortgage, it is now much easier for the common home buyer to be able to afford a home that requires a little (of a lot of) TLC.
