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Most recent posting below. See other blogs in the "Other Blogs" section at the bottom.

Purchasing Your Next Home Using a 203-K Renovation Loan

Purchasing a home using a renovation loan can be an amazing opportunity or a huge nightmare.  The difference lies in being educated about the process, your budget and making smart decisions!
Recently, clients of mine purchased a home that was their dream home.  They just knew it was the one for them.  It had the perfect school district, great community, quiet neighborhood and just the right layout and space for their family.  But, the septic failed!  That's not a cheap item to replace, especially in Hopewell Township, NJ.  The home was priced a bit lower though as the septic was anticipated to be an issue.  
The seller wasn't willing to replace the septic.  So, what to do, when it's the perfect house for you?  Negotiate!  As a result the buyers decided they would take on half of the cost of the septic and fund it via a Renovation Loan, also known as a 203-K in the lending world.  This type of loan can be a great option for exactly this situation, or any other large repairs that you want to have done before or just after moving in the home you're purchasing.  You can learn more about these loans at 203K Loans What to Know.
My client shared these helpful tips to consider if you find yourself in a similar situation:

1 - Not every contractor does renovation loans, and some don't even know what they are.  Be sure you're only considering contractors who are familiar with (they get paid by the bank as the work gets done, not before) and willing to take on a bank-funded project.
2 - Consider other projects that might make sense to finance as part of the loan as well.  We had a few in mind but based on budget, narrowed it down to a porch conversion to a den.
3 - Septic replacement requires getting multiple quotes, permits and typically can't be completed unless the conditions are just right.  Be sure you know your timeline, especially if you don't have anywhere to live until the work is complete!
4 - Always negotiate and then negotiate some more.
5 - Do your research on area contractors and septic companies.  Leverage local Facebook groups, your Realtor and apps like Nextdoor to get solid recommendations and interview a few before selecting one.

When asked if she felt the process and projects were worth it?  She said "Absolutely.  I'd do it over again in a heartbeat.  We knew this house was for us, and everyday I appreciate it more.  We love it!"
Curious to see how that porch conversion to a den turned out? Click Here
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