A Real Stockton Story: First Time Homebuyer with a Fixer Upper

By Kimberly Shane

Real stockton Story blog-01When this single mother and school teacher walked into her local Stockton Mortgage office, she was frazzled. What started out as a promising endeavor, purchasing her first home, took a turn for the worse when she realized what all was involved in buying a fixer upper. Once Joe Daly, Stockton’s Director of Renovation Lending, came into the picture things went much smoother— within 31 days her home loan was closed, and the renovations commenced on the home where she would raise her daughter.

“It was very emotional for her (the homebuyer). You could sense her pride in taking on this project. She couldn’t wait to get into the house and make it her own,” says Joe Daly, recounting the scene at the closing table.

Her home needed a lot of work. Not only had the home sat empty for an extended time but it was not well cared for by previous owners. The planned repairs include:

  • Repairing the roof leaks
  • Installing Handrails
  • Fixing all the interior doors
  • Installing new smoke detectors
  • Making repairs to the breaker box and furnace
  • Drywall repair throughout the home
  • Interior paint
  • Installing new carpet in several rooms
  • Lead base paint remediation/stabilization in several locations including door jambs, basement ceiling, kitchen.

With a list of repairs such as this, one could become intimidated, but this homeowner felt confident moving forward because she has a team behind her. Not only is she working with a knowledgeable contractor and is assisted by Joe Daly who has decades of experience with lending and renovation. But her HUD consultant, who originally walked the property and advised her on anticipated home repairs, is going to be there along the way. His role is to ensure the contractor stays on track to complete the project in the required 6 months and that the homeowner is not taken advantage of. The HUD consultant will not only check in with both parties but will visit the property to check on the project.

Her future as a homeowner is bright, not just emotionally but also, financially. The home she purchased was a HUD home, listed at $34,700. Because she serves that same neighborhood as a school teacher, she qualified for the Good Neighbor Next Door program through HUD, giving her 50% off the purchase price. Meaning her new purchase price was $17,350.

Her out-of-pocket expenses were few; the down payment requirement was lowered to $100.00, thanks to her FHA loan, and she could roll the closing costs and any prepaids into her loan amount. Also rolled into her loan amount was the $20,000.00 in estimated repair costs; meaning her home was purchased for $37,350. The projected improved value of her home is $110,000 giving this homeowner over $72,000 in projected home equity.

The home repair will not only benefit the homeowner but will assist in revitalizing her neighborhood, something HUD has set out to do with most of their programs. The Good Neighbor Next Door program, encourages public servants to move into the area in which they serve—connecting them more to the community in which they work. If you are interested in renovation financing, check out our page about the 203k loan, dedicated to financing a fixer upper!

If you would like help as a first-time home buyer we are here for you, check out our page to learn more.

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Tags: Renovate, reno, renovation, 203k Loan, House Buying, Renovation Lending, 203k, 203k Vs FHA