Saturday, October 31, 2015

Can Portola CA Take Advantage of the FHA 203k Programs?


The hustling bustling town of Portola located in Plumas County CA, can certainly use the advantages of the FHA 203k loan guarantee program. Why do I say "loan guarantee program"? Simple because that is what FHA is. They guarantee the lender that they will buy the loan back up to 96.5% of it anyway if for some reason the buyer doesn't make the payments and the home needs to be foreclosed.

What that means to the buyer or person refinancing is two-fold.

1) The borrower gets into the home with only 3.5% down and only 2.5% down on a refinance and their equity may be substituted for that so they might get the refinance and renovation money with no money out of their pockets.

2) The borrower gets the money to purchase or refinance AND the money to remodel or renovate the home all in one, low interest, thirty-year fixed rate mortgage. Money is only limited by maximum loan limits for the county. In Plumas County it means you might purchase a home for $250,000 and put another $75,000 into it in remodeling. Make it YOUR own home with your finished touches.

What it means to a Realtor - lots more business even when inventory is low. How is that you say? Easy, when inventory is low you may have a 2-bedroom home with one bathroom and your client needs a 3-bedroom, 2 bath house... it is a 203k and we add the other bedroom or two and bathroom or two.  Just think of it this way, you have a 2-bedroom house for $175,000 and they put $175,000 into the remodel. In 3-5 years you will likely be selling that $350,000 home for them.

What about those mixed use buildings downtown? Did you know you can purchase a mixed use building under this program? Higher commissions are all yours. What is a mixed use that would qualify? How about a storefront with two stores of living area above, even one story of living area above. You merely ignore the commercial aspects and count the residential units to see what $ amount you can get from the chart below.  So, for three units over a commercial store you are looking at a loan amount of $521,400 which means the sales price might be about $540,000.00 and the buyer gets in for 3.5% down payment or about $18,900. Lives in one unit, rents two out for about $600 per month each so their rent on their living unit is about $1800 per month and they have the store to rent out or run their business. If they tent it out for $2000 per month they are living rent free in Plumas County, Portola CA

PLUMAS County FHA Loan Limits

One-Family - $336,950
Two-Family - $431,350
Three-Family - $521,400
Four-Family - $648,000