203k Loan Considerations

[Alex Lee]

I'm looking into buying a massive fixer upper in New Jersey. I was playing with the idea of selling my condo, taking 300k of the equity to put a down payment towards a house listed at 660k.

I'm assuming the reno will run $300/sqft and going in with the assumption that phase 1 will run 750k (figure the expansion of the house will have to wait) for the gut reno.

I assume/hope (but definitely not banking on) that I will be able to refi in 2-3 years at a lower interest rate; if not for a lower rate.

This will likely be a family home for the next 5-10 years at LEAST so investment value isn't quite at top of mind ATM.

Questions:

Even if it's not for lower interest rate, do you feel it's advisable to refi to remove the 203 loan in the future?

Would you recommend a 203k in my case?

Would it be smart to tack on another 203k in the future assuming my income covers payments?

[Paul Welden]

@Alex Lee

203k is an amazing tool as long as you don't overextend yourself financially. 

Using a 203k, you'll usually have quite a bit of equity that in 1-2 years you should be able to refi out of the FHA loan product into a conventional removing the MI associated with FHA loan products.

Hope this helps!