Comments on: Profile of a Row House Renovator – Heather Goss

By: Beth

Beth — Mon, 05 May 2008 05:05:12 +0000

Heather,
Congrats on taking the leap and getting the house. Would you mind sharing the name of your contractor. I’ve been trying to find one via the internet and it’s so hard to judge how things would go. Or similarly, how did you find your contractor?

Thanks.

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By: Heather

Heather — Wed, 16 Jan 2008 22:22:58 +0000

Yeah, what bogfrog said. I’m required to keep the FHA loan for 90 days, but on day 91 I’m high tailing it to the lender to refinance. And given that I got a pretty good cashback deal on my original offer on the house, I’m only really paying two months under the higher interest rate mortgage.

So I may have paid a few hundred extra upfront in interest, but when I refinance I’ll have approximately $20-30K in instant equity, which, along with my decent credit profile, should get me a pretty sweet interest rate on a 30-year fixed.

By: bogfrog

bogfrog — Wed, 16 Jan 2008 21:05:00 +0000

I think it is very hard to judge without knowing the numbers. No one wants to tell the world how much they had saved for a down-payment. Therefore, it’s hard for us to evaluate the difference between a construction loan and conventional. I’m sure Heather is already planning to refinance after the work is done and based on an increased value of the home. At least, that’s what people were doing when the market was stronger. Maybe it would be fruitless now.

By: Anonymous

Anonymous — Wed, 16 Jan 2008 17:45:10 +0000

seems silly to do a FHA loan which is now ~1.6%+ over the prevailing rate for 30 year fixed mortgages. over the life of the mortgage that is some serious cash. might it not have been better to delay home buying 6 months to save up more cash to tackle the relatively small amount of money (compared to the total purchase price) it costs to install a new heater and refinish floors? you would more than make up the difference in lower payments in the first few years of the mortgage. especially given that when you sell you are not likely to recover the costs of repairing the floor or the heater because buyers expect those things to work / be in good shape. that’s ~$20k in sunk costs that will add nothing to the value of the home. just my 2 cents.

By: Heather

Heather — Wed, 16 Jan 2008 02:50:29 +0000

Christina — I’ll end up writing an annoyingly long comment if I answer all your questions on this thread. Why don’t you shoot me an email at heather [at] dcist [dot] com — I’d be happy to answer all your questions. I didn’t know anyone who’d gone through the process before I did, so I know how confusing they can be.

By: Christina

Christina — Tue, 15 Jan 2008 22:37:59 +0000

Heather, lovely home! I wonder if you might be able to talk a little bit about the FHA loan process? I gather that it is much more involved than getting a regular mortgage, but I also think that would be the only way I could actually get a HOUSE I can afford is to get a place that might require some serious fixing up. Does FHA require you to get estimates on how much repairs will cost before you buy? Can you use the loan to buy things like major appliances? Do you have to get inspections to make sure the work is being done up to par? Can you use the FHA loan in order to do some work yourself, or do you have to have a licensed contractor?

I’m sure I could think of tons more questions but I’ll stop here. And again, great place — I know it’ll only be greater once you’re done with everything…congrats!

By: Heather

Heather — Tue, 15 Jan 2008 17:42:36 +0000

Thanks Susan. It’s still a long way from done, that’s for sure. I was only able to move in about 10 days ago, so the place is a real mess right now, but it’ll be so nice to get everything put away, paint on the walls, and then save up for the bathroom/kitchen overhauls!

Small point of clarification — FHA interest rates are based on your credit profile, same as regular mortgages, so 7.1% is just what I got. But they are always higher than a standard mortgage, and 7.1 is pretty average, from what I understand.

By: Susan

Susan — Tue, 15 Jan 2008 16:13:19 +0000

wow, so much work! But the improvements are fantastic, especially the floors. I like the way you stained them – it makes them look like older floors.