Here are some examples of real life closings that show you the true power of this loan:
Borrower 1: (Purchase – City of Chicago)
This borrower purchased a 3-unit property as an REO and did a Standard 203k loan with a plan review.
Purchase Price: $140,000
Total Repairs: $146,500
Loan Amount: $271,690
12 Months Later:
Appraised Value: $380,000
Conventional Loan Amount: $285,000
Cash Out at Closing: $10,000
EQUITY POSITION: 75.0% Loan to Value!
Borrower 2: (Purchase – City of Chicago)
This borrower purchased a 3-unit property as an REO and did a Standard 203k loan with a plan review.
Purchase Price: $92,550
Total Repairs: $151,234
Loan Amount: $278,759
Appraised Value: $365,000 with repairs.
EQUITY POSITION: 76.4% Loan to Value!
Borrower 3: (Refinance – City of Chicago)
As-Is Value: $27,500
Total Repairs: $100,000
Loan Amount: $118,000
Appraised Value: $165,000 with repairs.
EQUITY POSITION: 71.5% Loan to Value!
Each of these borrowers was able to refinance into a conventional loan as a result of the equity gained from the renovation. At minimum, this saved each borrower the monthly mortgage insurance premiums.
All this with a 3.5% down payment!!!!
Now tell yourself that this isn’t a great loan for this market. Buy a distressed property, clean it up, make it YOUR home the way YOU want it and get instant equity!
