When Jon Emler began his search for homes about a year ago, he and his fiancé were interested in finding a house that needed a little bit of fixing up. A carpenter by trade, he didn’t mind putting work into a house…but he wasn’t prepared for what they found.
They found a nearly 1,700-square-foot two-story colonial with attached two-car garage in suburban Boardman, Ohio. Built in 1976, it had a nice façade, big yard, and was on a quiet street…perfect for raising a family. Three bedrooms gives them plenty of space for future kiddos, the wood-burning fireplace gives the family room a nice ambiance that would be perfect during Ohio’s long, cold winters, and the full 950-square-foot basement has plenty of potential. However, after sitting vacant for a year, the house had its blemishes.
“When I first came into the house, we saw that the carpet was stained. The kitchen was nice, but there was woodwork throughout that had been chewed on by a dog. I’m in the Carpenters union, so all I saw was dollar signs.” – Jon Emler
The house needed new trim around the floors, new windows, and was in desperate need of fresh paint. There was a crack in the foundation, and the bathroom floor next to the tub had a hole “so big you could put your foot through it.” The tub itself felt like it might fall through the floor.
“The wood was rotted out and you could see the floor joist.”
Jon’s fiancé liked the house because after all the DIY fixes, they be able to truly call the house theirs. For the bigger fixes, Jon spoke with his realtor, who brought up the possibility of an FHA 203k loan, which he had never heard of.
He inquired online about the 203k and found an agent in Toledo who said that with a credit score of 645, he was in a good position to be approved. They began the application process and Jon put in a $106,000 bid for the house. After about a month and a half, everything was in place and the paperwork was in to the underwriter.
Unfortunately, the agent from Toledo said he was declined for reasons that Jon disagreed with. Still, he had 24 days to make a decision on whether or not he wanted to move forward with the house. Jon’s realtor introduced him to me. After working with Jon, I was able to get him a pre-qualification letter after two days.
It wasn’t in time to meet the deadline and Jon had to rebid $110,000 to get the house, which worked out to be another $22 per month to his mortgage payment. But after working close with him, we were able to get Jon and his fiancé approved for the 203k loan. For an added bonus, some of the renovations made him eligible for the PowerSaver Grant, which put $2,500 toward his closing costs.
“That was great, especially for someone like me who is a first-time homebuyer. With the money I saved, I was able to buy paint, supplies to patch some holes in the woodwork, a new lawnmower and a grill.”
Admittedly, Jon was eager to move into his new place and get to work, and the 203k process took a little longer than he probably liked. But my office and staff worked with him the entire way, vouching for him when the loan looked like it might be in danger of denied a second time, and even getting all the forms to him digitally so he didn’t have to take time off of work to come in and sign them. From the time he placed his bid to the close of the house, the process took 30 days, and we were able to get him approved for a 30-year fixed mortgage at 5.25%. Jon only had to put down $1,400 in closing costs.
In the basement, they ran some new plumbing lines reinforced the north and west walls by filling the core of the block with concrete. They also filled in some of the cracks and waterproofed the walls. Jon and his fiancé will use the money they saved with the Power Saver grant to do the superficial stuff themselves, and he’s already started painting some of the rooms.
“I would highly recommend the 203k to any first-time home buyer, especially if you can find a house that you don’t have to put a lot of money into. Once this is finished and painted and I’m moved in, it’s a brand new house for $126,000.”